Correlation Between Citigroup and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Citigroup and SMA Solar 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 SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and SMA Solar Technology, you can compare the effects of market volatilities on Citigroup and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and SMA Solar.
Diversification Opportunities for Citigroup and SMA Solar
Pay attention - limited upside
The 3 months correlation between Citigroup and SMA is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Citigroup i.e., Citigroup and SMA Solar go up and down completely randomly.
Pair Corralation between Citigroup and SMA Solar
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.45 times more return on investment than SMA Solar. However, Citigroup is 2.21 times less risky than SMA Solar. It trades about 0.07 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.2 per unit of risk. If you would invest 6,079 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,008 from holding Citigroup or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.18% |
| Values | Daily Returns |
Citigroup vs. SMA Solar Technology
Performance |
| Timeline |
| Citigroup |
| SMA Solar Technology |
Citigroup and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and SMA Solar
The main advantage of trading using opposite Citigroup and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| SMA Solar vs. PSI Software AG | SMA Solar vs. Alfa Financial Software | SMA Solar vs. Major Drilling Group | SMA Solar vs. ATOSS SOFTWARE |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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