Correlation Between Citigroup and Tryg AS
Can any of the company-specific risk be diversified away by investing in both Citigroup and Tryg AS 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 Tryg AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Tryg AS, you can compare the effects of market volatilities on Citigroup and Tryg AS 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 Tryg AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Tryg AS.
Diversification Opportunities for Citigroup and Tryg AS
Very weak diversification
The 3 months correlation between Citigroup and Tryg is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tryg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tryg AS 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 Tryg AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tryg AS has no effect on the direction of Citigroup i.e., Citigroup and Tryg AS go up and down completely randomly.
Pair Corralation between Citigroup and Tryg AS
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.33 times more return on investment than Tryg AS. However, Citigroup is 2.33 times more volatile than Tryg AS. It trades about 0.21 of its potential returns per unit of risk. Tryg AS is currently generating about -0.06 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Tryg AS
Performance |
| Timeline |
| Citigroup |
| Tryg AS |
Citigroup and Tryg AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Tryg AS
The main advantage of trading using opposite Citigroup and Tryg AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Tryg AS 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 Tryg AS will offset losses from the drop in Tryg AS's long position.The idea behind Citigroup and Tryg AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Tryg AS vs. Dataproces Group AS | Tryg AS vs. cBrain AS | Tryg AS vs. ALK Abell AS | Tryg AS vs. ChemoMetec AS |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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