Correlation Between Citigroup and Surge Components
Can any of the company-specific risk be diversified away by investing in both Citigroup and Surge Components 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 Surge Components into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Surge Components, you can compare the effects of market volatilities on Citigroup and Surge Components 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 Surge Components. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Surge Components.
Diversification Opportunities for Citigroup and Surge Components
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Surge is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Surge Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Components 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 Surge Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Components has no effect on the direction of Citigroup i.e., Citigroup and Surge Components go up and down completely randomly.
Pair Corralation between Citigroup and Surge Components
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.46 times more return on investment than Surge Components. However, Citigroup is 2.15 times less risky than Surge Components. It trades about 0.08 of its potential returns per unit of risk. Surge Components is currently generating about -0.02 per unit of risk. If you would invest 4,525 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,562 from holding Citigroup or generate 56.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Citigroup vs. Surge Components
Performance |
| Timeline |
| Citigroup |
| Surge Components |
Citigroup and Surge Components Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Surge Components
The main advantage of trading using opposite Citigroup and Surge Components positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Surge Components 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 Surge Components will offset losses from the drop in Surge Components' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Surge Components vs. BCE Inc | Surge Components vs. Axiologix | Surge Components vs. Advanced Info Service | Surge Components vs. HUMANA INC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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