Correlation Between Citigroup and River Tech
Can any of the company-specific risk be diversified away by investing in both Citigroup and River Tech 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 River Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and River Tech plc, you can compare the effects of market volatilities on Citigroup and River Tech 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 River Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and River Tech.
Diversification Opportunities for Citigroup and River Tech
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and River is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and River Tech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River Tech plc 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 River Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River Tech plc has no effect on the direction of Citigroup i.e., Citigroup and River Tech go up and down completely randomly.
Pair Corralation between Citigroup and River Tech
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.4 times more return on investment than River Tech. However, Citigroup is 2.5 times less risky than River Tech. It trades about 0.07 of its potential returns per unit of risk. River Tech plc is currently generating about -0.04 per unit of risk. If you would invest 6,117 in Citigroup on August 29, 2024 and sell it today you would earn a total of 899.00 from holding Citigroup or generate 14.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Citigroup vs. River Tech plc
Performance |
| Timeline |
| Citigroup |
| River Tech plc |
Citigroup and River Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and River Tech
The main advantage of trading using opposite Citigroup and River Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, River Tech 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 River Tech will offset losses from the drop in River Tech's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| River Tech vs. Huddlestock Fintech As | River Tech vs. Xplora Technologies As | River Tech vs. Ocean Sun As | River Tech vs. Polight ASA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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