Correlation Between Citigroup and United Parcel
Can any of the company-specific risk be diversified away by investing in both Citigroup and United Parcel 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 United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and United Parcel Service, you can compare the effects of market volatilities on Citigroup and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and United Parcel.
Diversification Opportunities for Citigroup and United Parcel
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and United is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Citigroup i.e., Citigroup and United Parcel go up and down completely randomly.
Pair Corralation between Citigroup and United Parcel
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.98 times more return on investment than United Parcel. However, Citigroup is 1.02 times less risky than United Parcel. It trades about 0.07 of its potential returns per unit of risk. United Parcel Service is currently generating about 0.06 per unit of risk. If you would invest 6,064 in Citigroup on September 3, 2024 and sell it today you would earn a total of 1,023 from holding Citigroup or generate 16.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.43% |
| Values | Daily Returns |
Citigroup vs. United Parcel Service
Performance |
| Timeline |
| Citigroup |
| United Parcel Service |
Citigroup and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and United Parcel
The main advantage of trading using opposite Citigroup and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| United Parcel vs. FedEx | United Parcel vs. Sequoia Logstica e | United Parcel vs. Energisa SA | United Parcel vs. BTG Pactual Logstica |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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