Correlation Between Citigroup and Schneider Electric
Can any of the company-specific risk be diversified away by investing in both Citigroup and Schneider Electric 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 Schneider Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Schneider Electric SE, you can compare the effects of market volatilities on Citigroup and Schneider Electric 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 Schneider Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Schneider Electric.
Diversification Opportunities for Citigroup and Schneider Electric
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Schneider is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Schneider Electric SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric 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 Schneider Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider Electric has no effect on the direction of Citigroup i.e., Citigroup and Schneider Electric go up and down completely randomly.
Pair Corralation between Citigroup and Schneider Electric
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.17 times more return on investment than Schneider Electric. However, Citigroup is 1.17 times more volatile than Schneider Electric SE. It trades about 0.06 of its potential returns per unit of risk. Schneider Electric SE is currently generating about 0.02 per unit of risk. If you would invest 6,131 in Citigroup on August 24, 2024 and sell it today you would earn a total of 764.00 from holding Citigroup or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.9% |
| Values | Daily Returns |
Citigroup vs. Schneider Electric SE
Performance |
| Timeline |
| Citigroup |
| Schneider Electric |
Citigroup and Schneider Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Schneider Electric
The main advantage of trading using opposite Citigroup and Schneider Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Schneider Electric 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 Schneider Electric will offset losses from the drop in Schneider Electric's long position.| Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Royal Bank of | Citigroup vs. JPMorgan Chase Co |
| Schneider Electric vs. Air Liquide SA | Schneider Electric vs. Vinci SA | Schneider Electric vs. LOreal SA | Schneider Electric vs. Compagnie de Saint Gobain |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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