Correlation Between Citigroup and UGI Corp
Can any of the company-specific risk be diversified away by investing in both Citigroup and UGI Corp 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 UGI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and UGI Corp Unit, you can compare the effects of market volatilities on Citigroup and UGI Corp 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 UGI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and UGI Corp.
Diversification Opportunities for Citigroup and UGI Corp
Excellent diversification
The 3 months correlation between Citigroup and UGI is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and UGI Corp Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UGI Corp Unit 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 UGI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UGI Corp Unit has no effect on the direction of Citigroup i.e., Citigroup and UGI Corp go up and down completely randomly.
Pair Corralation between Citigroup and UGI Corp
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.97 times more return on investment than UGI Corp. However, Citigroup is 1.03 times less risky than UGI Corp. It trades about 0.07 of its potential returns per unit of risk. UGI Corp Unit is currently generating about -0.11 per unit of risk. If you would invest 4,381 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,706 from holding Citigroup or generate 61.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 28.24% |
| Values | Daily Returns |
Citigroup vs. UGI Corp Unit
Performance |
| Timeline |
| Citigroup |
| UGI Corp Unit |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and UGI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and UGI Corp
The main advantage of trading using opposite Citigroup and UGI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, UGI Corp 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 UGI Corp will offset losses from the drop in UGI Corp's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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