Correlation Between Citigroup and VirTra
Can any of the company-specific risk be diversified away by investing in both Citigroup and VirTra 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 VirTra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and VirTra Inc, you can compare the effects of market volatilities on Citigroup and VirTra 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 VirTra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and VirTra.
Diversification Opportunities for Citigroup and VirTra
Poor diversification
The 3 months correlation between Citigroup and VirTra is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and VirTra Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VirTra Inc 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 VirTra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VirTra Inc has no effect on the direction of Citigroup i.e., Citigroup and VirTra go up and down completely randomly.
Pair Corralation between Citigroup and VirTra
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.22 times less return on investment than VirTra. But when comparing it to its historical volatility, Citigroup is 2.96 times less risky than VirTra. It trades about 0.06 of its potential returns per unit of risk. VirTra Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 478.00 in VirTra Inc on August 27, 2024 and sell it today you would earn a total of 293.00 from holding VirTra Inc or generate 61.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. VirTra Inc
Performance |
| Timeline |
| Citigroup |
| VirTra Inc |
Citigroup and VirTra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and VirTra
The main advantage of trading using opposite Citigroup and VirTra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, VirTra 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 VirTra will offset losses from the drop in VirTra's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| VirTra vs. Innovative Solutions and | VirTra vs. Park Electrochemical | VirTra vs. Ducommun Incorporated | VirTra vs. National Presto Industries |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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