Correlation Between Citigroup and Rockwood Realisation
Can any of the company-specific risk be diversified away by investing in both Citigroup and Rockwood Realisation 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 Rockwood Realisation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Rockwood Realisation PLC, you can compare the effects of market volatilities on Citigroup and Rockwood Realisation 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 Rockwood Realisation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Rockwood Realisation.
Diversification Opportunities for Citigroup and Rockwood Realisation
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Rockwood is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Rockwood Realisation PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwood Realisation 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 Rockwood Realisation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwood Realisation PLC has no effect on the direction of Citigroup i.e., Citigroup and Rockwood Realisation go up and down completely randomly.
Pair Corralation between Citigroup and Rockwood Realisation
Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Rockwood Realisation. In addition to that, Citigroup is 2.9 times more volatile than Rockwood Realisation PLC. It trades about -0.04 of its total potential returns per unit of risk. Rockwood Realisation PLC is currently generating about -0.04 per unit of volatility. If you would invest 26,900 in Rockwood Realisation PLC on November 28, 2024 and sell it today you would lose (150.00) from holding Rockwood Realisation PLC or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. Rockwood Realisation PLC
Performance |
| Timeline |
| Citigroup |
| Rockwood Realisation PLC |
Citigroup and Rockwood Realisation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Rockwood Realisation
The main advantage of trading using opposite Citigroup and Rockwood Realisation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Rockwood Realisation 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 Rockwood Realisation will offset losses from the drop in Rockwood Realisation's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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