Correlation Between Citigroup and AB Traction
Can any of the company-specific risk be diversified away by investing in both Citigroup and AB Traction 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 AB Traction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and AB Traction, you can compare the effects of market volatilities on Citigroup and AB Traction 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 AB Traction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and AB Traction.
Diversification Opportunities for Citigroup and AB Traction
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and TRAC-B is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AB Traction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Traction 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 AB Traction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Traction has no effect on the direction of Citigroup i.e., Citigroup and AB Traction go up and down completely randomly.
Pair Corralation between Citigroup and AB Traction
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.29 times more return on investment than AB Traction. However, Citigroup is 1.29 times more volatile than AB Traction. It trades about 0.11 of its potential returns per unit of risk. AB Traction is currently generating about 0.07 per unit of risk. If you would invest 4,676 in Citigroup on September 2, 2024 and sell it today you would earn a total of 2,411 from holding Citigroup or generate 51.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Citigroup vs. AB Traction
Performance |
| Timeline |
| Citigroup |
| AB Traction |
Citigroup and AB Traction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and AB Traction
The main advantage of trading using opposite Citigroup and AB Traction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, AB Traction 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 AB Traction will offset losses from the drop in AB Traction's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| AB Traction vs. Svolder AB | AB Traction vs. Investment AB Oresund | AB Traction vs. L E Lundbergfretagen | AB Traction vs. Creades AB |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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