Correlation Between Citigroup and Reunion Neuroscience
Can any of the company-specific risk be diversified away by investing in both Citigroup and Reunion Neuroscience 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 Reunion Neuroscience into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Reunion Neuroscience, you can compare the effects of market volatilities on Citigroup and Reunion Neuroscience 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 Reunion Neuroscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Reunion Neuroscience.
Diversification Opportunities for Citigroup and Reunion Neuroscience
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Reunion is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Reunion Neuroscience in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reunion Neuroscience 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 Reunion Neuroscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reunion Neuroscience has no effect on the direction of Citigroup i.e., Citigroup and Reunion Neuroscience go up and down completely randomly.
Pair Corralation between Citigroup and Reunion Neuroscience
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.31 times less return on investment than Reunion Neuroscience. But when comparing it to its historical volatility, Citigroup is 4.47 times less risky than Reunion Neuroscience. It trades about 0.07 of its potential returns per unit of risk. Reunion Neuroscience is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 125.00 in Reunion Neuroscience on August 29, 2024 and sell it today you would lose (13.00) from holding Reunion Neuroscience or give up 10.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.52% |
| Values | Daily Returns |
Citigroup vs. Reunion Neuroscience
Performance |
| Timeline |
| Citigroup |
| Reunion Neuroscience |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and Reunion Neuroscience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Reunion Neuroscience
The main advantage of trading using opposite Citigroup and Reunion Neuroscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Reunion Neuroscience 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 Reunion Neuroscience will offset losses from the drop in Reunion Neuroscience's long position.The idea behind Citigroup and Reunion Neuroscience 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.| Reunion Neuroscience vs. Braxia Scientific Corp | Reunion Neuroscience vs. Oxford Nanopore Technologies | Reunion Neuroscience vs. Algernon Pharmaceuticals | Reunion Neuroscience vs. Awakn Life Sciences |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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