Correlation Between Citigroup and Saudi American
Can any of the company-specific risk be diversified away by investing in both Citigroup and Saudi American 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 Saudi American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Saudi American Holdings, you can compare the effects of market volatilities on Citigroup and Saudi American 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 Saudi American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Saudi American.
Diversification Opportunities for Citigroup and Saudi American
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Saudi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Saudi American Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saudi American Holdings 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 Saudi American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saudi American Holdings has no effect on the direction of Citigroup i.e., Citigroup and Saudi American go up and down completely randomly.
Pair Corralation between Citigroup and Saudi American
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.4 times more return on investment than Saudi American. However, Citigroup is 2.5 times less risky than Saudi American. It trades about 0.09 of its potential returns per unit of risk. Saudi American Holdings is currently generating about -0.05 per unit of risk. If you would invest 4,403 in Citigroup on August 28, 2024 and sell it today you would earn a total of 2,672 from holding Citigroup or generate 60.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Citigroup vs. Saudi American Holdings
Performance |
| Timeline |
| Citigroup |
| Saudi American Holdings |
Citigroup and Saudi American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Saudi American
The main advantage of trading using opposite Citigroup and Saudi American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Saudi American 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 Saudi American will offset losses from the drop in Saudi American's long position.The idea behind Citigroup and Saudi American Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Saudi American vs. Simon Property Group | Saudi American vs. Hudson Technologies | Saudi American vs. Ecovyst | Saudi American vs. Braskem SA Class |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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