Correlation Between Citigroup and Unity Software
Can any of the company-specific risk be diversified away by investing in both Citigroup and Unity Software 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 Unity Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Unity Software, you can compare the effects of market volatilities on Citigroup and Unity Software 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 Unity Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Unity Software.
Diversification Opportunities for Citigroup and Unity Software
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Unity is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software 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 Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of Citigroup i.e., Citigroup and Unity Software go up and down completely randomly.
Pair Corralation between Citigroup and Unity Software
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.18 times less return on investment than Unity Software. But when comparing it to its historical volatility, Citigroup is 2.28 times less risky than Unity Software. It trades about 0.21 of its potential returns per unit of risk. Unity Software is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,859 in Unity Software on August 29, 2024 and sell it today you would earn a total of 382.00 from holding Unity Software or generate 20.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Unity Software
Performance |
| Timeline |
| Citigroup |
| Unity Software |
Citigroup and Unity Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Unity Software
The main advantage of trading using opposite Citigroup and Unity Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Unity Software 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 Unity Software will offset losses from the drop in Unity Software's long position.The idea behind Citigroup and Unity Software 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.| Unity Software vs. AGRICULTBK HADR25 YC | Unity Software vs. GOLD ROAD RES | Unity Software vs. Chongqing Machinery Electric | Unity Software vs. HYDROFARM HLD GRP |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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