Correlation Between Citigroup and Transport
Can any of the company-specific risk be diversified away by investing in both Citigroup and Transport 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 Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Transport of, you can compare the effects of market volatilities on Citigroup and Transport 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 Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Transport.
Diversification Opportunities for Citigroup and Transport
Weak diversification
The 3 months correlation between Citigroup and Transport is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Transport of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport has no effect on the direction of Citigroup i.e., Citigroup and Transport go up and down completely randomly.
Pair Corralation between Citigroup and Transport
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.7 times more return on investment than Transport. However, Citigroup is 1.44 times less risky than Transport. It trades about 0.21 of its potential returns per unit of risk. Transport of is currently generating about 0.05 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 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 | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Transport of
Performance |
| Timeline |
| Citigroup |
| Transport |
Citigroup and Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Transport
The main advantage of trading using opposite Citigroup and Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Transport 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 Transport will offset losses from the drop in Transport's long position.The idea behind Citigroup and Transport of 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.| Transport vs. Kingfa Science Technology | Transport vs. Rico Auto Industries | Transport vs. GACM Technologies Limited | Transport vs. COSMO FIRST LIMITED |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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