Correlation Between Citigroup and Tractor Supply
Can any of the company-specific risk be diversified away by investing in both Citigroup and Tractor Supply 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 Tractor Supply into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Tractor Supply, you can compare the effects of market volatilities on Citigroup and Tractor Supply 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 Tractor Supply. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Tractor Supply.
Diversification Opportunities for Citigroup and Tractor Supply
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citigroup and Tractor is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tractor Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tractor Supply 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 Tractor Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tractor Supply has no effect on the direction of Citigroup i.e., Citigroup and Tractor Supply go up and down completely randomly.
Pair Corralation between Citigroup and Tractor Supply
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.55 times more return on investment than Tractor Supply. However, Citigroup is 1.83 times less risky than Tractor Supply. It trades about 0.01 of its potential returns per unit of risk. Tractor Supply is currently generating about -0.05 per unit of risk. If you would invest 7,143 in Citigroup on October 13, 2024 and sell it today you would lose (3.00) from holding Citigroup or give up 0.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Citigroup vs. Tractor Supply
Performance |
| Timeline |
| Citigroup |
| Tractor Supply |
Citigroup and Tractor Supply Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Tractor Supply
The main advantage of trading using opposite Citigroup and Tractor Supply positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Tractor Supply 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 Tractor Supply will offset losses from the drop in Tractor Supply's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Tractor Supply vs. ALERION CLEANPOWER | Tractor Supply vs. Acadia Healthcare | Tractor Supply vs. Garofalo Health Care | Tractor Supply vs. HEMISPHERE EGY |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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