Correlation Between Citigroup and Reunert
Can any of the company-specific risk be diversified away by investing in both Citigroup and Reunert 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 Reunert into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Reunert, you can compare the effects of market volatilities on Citigroup and Reunert 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 Reunert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Reunert.
Diversification Opportunities for Citigroup and Reunert
Weak diversification
The 3 months correlation between Citigroup and Reunert is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Reunert in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reunert 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 Reunert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reunert has no effect on the direction of Citigroup i.e., Citigroup and Reunert go up and down completely randomly.
Pair Corralation between Citigroup and Reunert
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.25 times more return on investment than Reunert. However, Citigroup is 1.25 times more volatile than Reunert. It trades about 0.11 of its potential returns per unit of risk. Reunert is currently generating about 0.07 per unit of risk. If you would invest 4,676 in Citigroup on September 2, 2024 and sell it today you would earn a total of 2,411 from holding Citigroup or generate 51.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Citigroup vs. Reunert
Performance |
| Timeline |
| Citigroup |
| Reunert |
Citigroup and Reunert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Reunert
The main advantage of trading using opposite Citigroup and Reunert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Reunert 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 Reunert will offset losses from the drop in Reunert's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Reunert vs. British American Tobacco | Reunert vs. Bytes Technology | Reunert vs. Deneb Investments | Reunert vs. HomeChoice Investments |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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