Correlation Between Citigroup and Farmaceutica
Can any of the company-specific risk be diversified away by investing in both Citigroup and Farmaceutica 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 Farmaceutica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Farmaceutica R, you can compare the effects of market volatilities on Citigroup and Farmaceutica 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 Farmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Farmaceutica.
Diversification Opportunities for Citigroup and Farmaceutica
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Farmaceutica is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Farmaceutica R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmaceutica R 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 Farmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmaceutica R has no effect on the direction of Citigroup i.e., Citigroup and Farmaceutica go up and down completely randomly.
Pair Corralation between Citigroup and Farmaceutica
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.07 times more return on investment than Farmaceutica. However, Citigroup is 1.07 times more volatile than Farmaceutica R. It trades about 0.11 of its potential returns per unit of risk. Farmaceutica R is currently generating about 0.02 per unit of risk. If you would invest 4,788 in Citigroup on September 12, 2024 and sell it today you would earn a total of 2,462 from holding Citigroup or generate 51.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Citigroup vs. Farmaceutica R
Performance |
| Timeline |
| Citigroup |
| Farmaceutica R |
Citigroup and Farmaceutica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Farmaceutica
The main advantage of trading using opposite Citigroup and Farmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Farmaceutica 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 Farmaceutica will offset losses from the drop in Farmaceutica's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Farmaceutica vs. IHUNT TECHNOLOGY IMPORT EXPORT | Farmaceutica vs. Biofarm Bucure | Farmaceutica vs. TRANSILVANIA LEASING SI | Farmaceutica vs. TRANSILVANIA INVESTMENTS ALLIANCE |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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