Correlation Between Citigroup and Reliance Industries
Can any of the company-specific risk be diversified away by investing in both Citigroup and Reliance 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 Reliance Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Reliance Industries Limited, you can compare the effects of market volatilities on Citigroup and Reliance 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 Reliance Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Reliance Industries.
Diversification Opportunities for Citigroup and Reliance Industries
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Reliance is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Reliance Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance 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 Reliance Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Industries has no effect on the direction of Citigroup i.e., Citigroup and Reliance Industries go up and down completely randomly.
Pair Corralation between Citigroup and Reliance Industries
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.09 times more return on investment than Reliance Industries. However, Citigroup is 1.09 times more volatile than Reliance Industries Limited. It trades about 0.07 of its potential returns per unit of risk. Reliance Industries Limited is currently generating about -0.03 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 | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Citigroup vs. Reliance Industries Limited
Performance |
| Timeline |
| Citigroup |
| Reliance Industries |
Citigroup and Reliance Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Reliance Industries
The main advantage of trading using opposite Citigroup and Reliance Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Reliance 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 Reliance Industries will offset losses from the drop in Reliance Industries' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Reliance Industries vs. Neste Oyj | Reliance Industries vs. Superior Plus Corp | Reliance Industries vs. NMI Holdings | Reliance Industries vs. Origin Agritech |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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