Correlation Between Citigroup and Sylvamo Corp
Can any of the company-specific risk be diversified away by investing in both Citigroup and Sylvamo Corp 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 Sylvamo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Sylvamo Corp, you can compare the effects of market volatilities on Citigroup and Sylvamo Corp 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 Sylvamo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Sylvamo Corp.
Diversification Opportunities for Citigroup and Sylvamo Corp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Sylvamo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Sylvamo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sylvamo Corp 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 Sylvamo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sylvamo Corp has no effect on the direction of Citigroup i.e., Citigroup and Sylvamo Corp go up and down completely randomly.
Pair Corralation between Citigroup and Sylvamo Corp
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.72 times less return on investment than Sylvamo Corp. But when comparing it to its historical volatility, Citigroup is 1.3 times less risky than Sylvamo Corp. It trades about 0.07 of its potential returns per unit of risk. Sylvamo Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7,080 in Sylvamo Corp on August 31, 2024 and sell it today you would earn a total of 2,149 from holding Sylvamo Corp or generate 30.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Sylvamo Corp
Performance |
| Timeline |
| Citigroup |
| Sylvamo Corp |
Citigroup and Sylvamo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Sylvamo Corp
The main advantage of trading using opposite Citigroup and Sylvamo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Sylvamo Corp 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 Sylvamo Corp will offset losses from the drop in Sylvamo Corp's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Sylvamo Corp vs. Mercer International | Sylvamo Corp vs. Suzano Papel e | Sylvamo Corp vs. UPM Kymmene Oyj | Sylvamo Corp vs. Clearwater Paper |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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