Correlation Between Citigroup and Reitmans
Can any of the company-specific risk be diversified away by investing in both Citigroup and Reitmans at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Citigroup and Reitmans into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Reitmans Limited, you can compare the effects of market volatilities on Citigroup and Reitmans and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Citigroup with a short position of Reitmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Reitmans.
Diversification Opportunities for Citigroup and Reitmans
Weak diversification
The 3 months correlation between Citigroup and Reitmans is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans Limited and Citigroup is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Citigroup are associated (or correlated) with Reitmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans Limited has no effect on the direction of Citigroup i.e., Citigroup and Reitmans go up and down completely randomly.
Pair Corralation between Citigroup and Reitmans
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.64 times more return on investment than Reitmans. However, Citigroup is 1.56 times less risky than Reitmans. It trades about 0.27 of its potential returns per unit of risk. Reitmans Limited is currently generating about 0.02 per unit of risk. If you would invest 6,889 in Citigroup on September 14, 2024 and sell it today you would earn a total of 307.00 from holding Citigroup or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Reitmans Limited
Performance |
| Timeline |
| Citigroup |
| Reitmans Limited |
Citigroup and Reitmans Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Reitmans
The main advantage of trading using opposite Citigroup and Reitmans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Reitmans can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Reitmans will offset losses from the drop in Reitmans' long position.The idea behind Citigroup and Reitmans Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Reitmans vs. Canada Goose Holdings | Reitmans vs. Spin Master Corp | Reitmans vs. Aritzia | Reitmans vs. iShares Canadian HYBrid |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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