Correlation Between Citigroup and Tronox Holdings
Can any of the company-specific risk be diversified away by investing in both Citigroup and Tronox Holdings 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 Tronox Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Tronox Holdings PLC, you can compare the effects of market volatilities on Citigroup and Tronox Holdings 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 Tronox Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Tronox Holdings.
Diversification Opportunities for Citigroup and Tronox Holdings
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Tronox is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tronox Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tronox Holdings PLC 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 Tronox Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tronox Holdings PLC has no effect on the direction of Citigroup i.e., Citigroup and Tronox Holdings go up and down completely randomly.
Pair Corralation between Citigroup and Tronox Holdings
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.55 times more return on investment than Tronox Holdings. However, Citigroup is 1.83 times less risky than Tronox Holdings. It trades about 0.12 of its potential returns per unit of risk. Tronox Holdings PLC is currently generating about 0.02 per unit of risk. If you would invest 4,325 in Citigroup on August 24, 2024 and sell it today you would earn a total of 2,690 from holding Citigroup or generate 62.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Tronox Holdings PLC
Performance |
| Timeline |
| Citigroup |
| Tronox Holdings PLC |
Citigroup and Tronox Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Tronox Holdings
The main advantage of trading using opposite Citigroup and Tronox Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Tronox Holdings 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 Tronox Holdings will offset losses from the drop in Tronox Holdings' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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