Correlation Between Citigroup and REDFLEX HOLDINGS
Can any of the company-specific risk be diversified away by investing in both Citigroup and REDFLEX HOLDINGS 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 REDFLEX HOLDINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and REDFLEX HOLDINGS LTD, you can compare the effects of market volatilities on Citigroup and REDFLEX HOLDINGS 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 REDFLEX HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and REDFLEX HOLDINGS.
Diversification Opportunities for Citigroup and REDFLEX HOLDINGS
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and REDFLEX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and REDFLEX HOLDINGS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDFLEX HOLDINGS LTD 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 REDFLEX HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDFLEX HOLDINGS LTD has no effect on the direction of Citigroup i.e., Citigroup and REDFLEX HOLDINGS go up and down completely randomly.
Pair Corralation between Citigroup and REDFLEX HOLDINGS
Taking into account the 90-day investment horizon Citigroup is expected to under-perform the REDFLEX HOLDINGS. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 10.5 times less risky than REDFLEX HOLDINGS. The stock trades about -0.02 of its potential returns per unit of risk. The REDFLEX HOLDINGS LTD is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4.40 in REDFLEX HOLDINGS LTD on November 27, 2024 and sell it today you would lose (0.97) from holding REDFLEX HOLDINGS LTD or give up 22.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. REDFLEX HOLDINGS LTD
Performance |
| Timeline |
| Citigroup |
| REDFLEX HOLDINGS LTD |
Citigroup and REDFLEX HOLDINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and REDFLEX HOLDINGS
The main advantage of trading using opposite Citigroup and REDFLEX HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, REDFLEX HOLDINGS 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 REDFLEX HOLDINGS will offset losses from the drop in REDFLEX HOLDINGS's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| REDFLEX HOLDINGS vs. Lincoln Electric Holdings | REDFLEX HOLDINGS vs. Toro Co | REDFLEX HOLDINGS vs. ioneer Ltd American | REDFLEX HOLDINGS vs. RBC Bearings Incorporated |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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