Correlation Between Citigroup and Taiga Building
Can any of the company-specific risk be diversified away by investing in both Citigroup and Taiga Building 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 Taiga Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Taiga Building Products, you can compare the effects of market volatilities on Citigroup and Taiga Building 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 Taiga Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Taiga Building.
Diversification Opportunities for Citigroup and Taiga Building
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Taiga is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Taiga Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiga Building Products 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 Taiga Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiga Building Products has no effect on the direction of Citigroup i.e., Citigroup and Taiga Building go up and down completely randomly.
Pair Corralation between Citigroup and Taiga Building
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.08 times more return on investment than Taiga Building. However, Citigroup is 1.08 times more volatile than Taiga Building Products. It trades about 0.21 of its potential returns per unit of risk. Taiga Building Products is currently generating about -0.03 per unit of risk. If you would invest 6,360 in Citigroup on August 28, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Taiga Building Products
Performance |
| Timeline |
| Citigroup |
| Taiga Building Products |
Citigroup and Taiga Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Taiga Building
The main advantage of trading using opposite Citigroup and Taiga Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Taiga Building 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 Taiga Building will offset losses from the drop in Taiga Building's long position.The idea behind Citigroup and Taiga Building Products 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.| Taiga Building vs. Goodfellow | Taiga Building vs. Conifex Timber | Taiga Building vs. Supremex | Taiga Building vs. Western Forest Products |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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