Correlation Between Citigroup and Teradyne
Can any of the company-specific risk be diversified away by investing in both Citigroup and Teradyne 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 Teradyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Teradyne, you can compare the effects of market volatilities on Citigroup and Teradyne 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 Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Teradyne.
Diversification Opportunities for Citigroup and Teradyne
Pay attention - limited upside
The 3 months correlation between Citigroup and Teradyne is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Citigroup i.e., Citigroup and Teradyne go up and down completely randomly.
Pair Corralation between Citigroup and Teradyne
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.84 times more return on investment than Teradyne. However, Citigroup is 1.2 times less risky than Teradyne. It trades about 0.15 of its potential returns per unit of risk. Teradyne is currently generating about -0.18 per unit of risk. If you would invest 6,205 in Citigroup on August 30, 2024 and sell it today you would earn a total of 811.00 from holding Citigroup or generate 13.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Teradyne
Performance |
| Timeline |
| Citigroup |
| Teradyne |
Citigroup and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Teradyne
The main advantage of trading using opposite Citigroup and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Teradyne vs. First Solar | Teradyne vs. Sunrun Inc | Teradyne vs. Canadian Solar | Teradyne vs. SolarEdge Technologies |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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