Correlation Between Citigroup and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Citigroup and Raytheon Technologies 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 Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Raytheon Technologies Corp, you can compare the effects of market volatilities on Citigroup and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Raytheon Technologies.
Diversification Opportunities for Citigroup and Raytheon Technologies
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Raytheon is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Citigroup i.e., Citigroup and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Citigroup and Raytheon Technologies
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.41 times more return on investment than Raytheon Technologies. However, Citigroup is 1.41 times more volatile than Raytheon Technologies Corp. It trades about 0.23 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about -0.1 per unit of risk. If you would invest 6,360 in Citigroup on August 27, 2024 and sell it today you would earn a total of 624.00 from holding Citigroup or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Citigroup |
| Raytheon Technologies |
Citigroup and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Raytheon Technologies
The main advantage of trading using opposite Citigroup and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| Raytheon Technologies vs. Northrop Grumman | Raytheon Technologies vs. General Dynamics | Raytheon Technologies vs. The Boeing | Raytheon Technologies vs. L3Harris Technologies |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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