Correlation Between Citigroup and RF Industries
Can any of the company-specific risk be diversified away by investing in both Citigroup and RF Industries 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 RF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and RF Industries, you can compare the effects of market volatilities on Citigroup and RF Industries 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 RF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and RF Industries.
Diversification Opportunities for Citigroup and RF Industries
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and RFIL is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and RF Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Industries 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 RF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Industries has no effect on the direction of Citigroup i.e., Citigroup and RF Industries go up and down completely randomly.
Pair Corralation between Citigroup and RF Industries
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.3 times more return on investment than RF Industries. However, Citigroup is 1.3 times more volatile than RF Industries. It trades about 0.24 of its potential returns per unit of risk. RF Industries is currently generating about -0.11 per unit of risk. If you would invest 6,245 in Citigroup on August 25, 2024 and sell it today you would earn a total of 739.00 from holding Citigroup or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. RF Industries
Performance |
| Timeline |
| Citigroup |
| RF Industries |
Citigroup and RF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and RF Industries
The main advantage of trading using opposite Citigroup and RF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, RF Industries 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 RF Industries will offset losses from the drop in RF Industries' long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Royal Bank of | Citigroup vs. JPMorgan Chase Co | Citigroup vs. Nu Holdings |
| RF Industries vs. Nortech Systems Incorporated | RF Industries vs. Richardson Electronics | RF Industries vs. AstroNova |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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