Correlation Between Citigroup and Textron
Can any of the company-specific risk be diversified away by investing in both Citigroup and Textron 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 Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Textron, you can compare the effects of market volatilities on Citigroup and Textron 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 Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Textron.
Diversification Opportunities for Citigroup and Textron
Poor diversification
The 3 months correlation between Citigroup and Textron is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron 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 Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of Citigroup i.e., Citigroup and Textron go up and down completely randomly.
Pair Corralation between Citigroup and Textron
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.09 times more return on investment than Textron. However, Citigroup is 1.09 times more volatile than Textron. It trades about 0.08 of its potential returns per unit of risk. Textron is currently generating about 0.08 per unit of risk. If you would invest 4,525 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,562 from holding Citigroup or generate 56.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Textron
Performance |
| Timeline |
| Citigroup |
| Textron |
Citigroup and Textron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Textron
The main advantage of trading using opposite Citigroup and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Textron 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 Textron will offset losses from the drop in Textron's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Textron vs. KB Home | Textron vs. DXC Technology | Textron vs. Micron Technology | Textron vs. Cognizant Technology Solutions |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |