Correlation Between Citigroup and URBAN OUTFITTERS
Can any of the company-specific risk be diversified away by investing in both Citigroup and URBAN OUTFITTERS 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 URBAN OUTFITTERS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and URBAN OUTFITTERS, you can compare the effects of market volatilities on Citigroup and URBAN OUTFITTERS 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 URBAN OUTFITTERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and URBAN OUTFITTERS.
Diversification Opportunities for Citigroup and URBAN OUTFITTERS
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and URBAN is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and URBAN OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URBAN OUTFITTERS 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 URBAN OUTFITTERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URBAN OUTFITTERS has no effect on the direction of Citigroup i.e., Citigroup and URBAN OUTFITTERS go up and down completely randomly.
Pair Corralation between Citigroup and URBAN OUTFITTERS
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.22 times less return on investment than URBAN OUTFITTERS. But when comparing it to its historical volatility, Citigroup is 2.13 times less risky than URBAN OUTFITTERS. It trades about 0.21 of its potential returns per unit of risk. URBAN OUTFITTERS is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,340 in URBAN OUTFITTERS on August 31, 2024 and sell it today you would earn a total of 1,140 from holding URBAN OUTFITTERS or generate 34.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. URBAN OUTFITTERS
Performance |
| Timeline |
| Citigroup |
| URBAN OUTFITTERS |
Citigroup and URBAN OUTFITTERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and URBAN OUTFITTERS
The main advantage of trading using opposite Citigroup and URBAN OUTFITTERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, URBAN OUTFITTERS 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 URBAN OUTFITTERS will offset losses from the drop in URBAN OUTFITTERS's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| URBAN OUTFITTERS vs. AM EAGLE OUTFITTERS | URBAN OUTFITTERS vs. American Airlines Group | URBAN OUTFITTERS vs. Gladstone Investment | URBAN OUTFITTERS vs. G III Apparel Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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