Correlation Between Citigroup and THOR Financial
Can any of the company-specific risk be diversified away by investing in both Citigroup and THOR Financial 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 THOR Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and THOR Financial Technologies, you can compare the effects of market volatilities on Citigroup and THOR Financial 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 THOR Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and THOR Financial.
Diversification Opportunities for Citigroup and THOR Financial
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and THOR is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and THOR Financial Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THOR Financial Techn 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 THOR Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THOR Financial Techn has no effect on the direction of Citigroup i.e., Citigroup and THOR Financial go up and down completely randomly.
Pair Corralation between Citigroup and THOR Financial
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.21 times more return on investment than THOR Financial. However, Citigroup is 3.21 times more volatile than THOR Financial Technologies. It trades about 0.11 of its potential returns per unit of risk. THOR Financial Technologies is currently generating about -0.03 per unit of risk. If you would invest 6,543 in Citigroup on September 13, 2024 and sell it today you would earn a total of 600.00 from holding Citigroup or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. THOR Financial Technologies
Performance |
| Timeline |
| Citigroup |
| THOR Financial Techn |
Citigroup and THOR Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and THOR Financial
The main advantage of trading using opposite Citigroup and THOR Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, THOR Financial 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 THOR Financial will offset losses from the drop in THOR Financial's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| THOR Financial vs. ETC 6 Meridian | THOR Financial vs. Harbor Dividend Growth | THOR Financial vs. Day HaganNed Davis |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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