Correlation Between Citigroup and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Citigroup and Scandinavian Tobacco 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 Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Citigroup and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Scandinavian Tobacco.
Diversification Opportunities for Citigroup and Scandinavian Tobacco
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Scandinavian is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Citigroup i.e., Citigroup and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Citigroup and Scandinavian Tobacco
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.11 times more return on investment than Scandinavian Tobacco. However, Citigroup is 1.11 times more volatile than Scandinavian Tobacco Group. It trades about 0.12 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.05 per unit of risk. If you would invest 4,411 in Citigroup on August 25, 2024 and sell it today you would earn a total of 2,573 from holding Citigroup or generate 58.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Citigroup vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Citigroup |
| Scandinavian Tobacco |
Citigroup and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Scandinavian Tobacco
The main advantage of trading using opposite Citigroup and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Scandinavian Tobacco vs. Matas AS | Scandinavian Tobacco vs. Tryg AS | Scandinavian Tobacco vs. Alm Brand | Scandinavian Tobacco vs. Royal Unibrew AS |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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