Correlation Between Citigroup and Walmart
Can any of the company-specific risk be diversified away by investing in both Citigroup and Walmart 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 Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Walmart, you can compare the effects of market volatilities on Citigroup and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Walmart.
Diversification Opportunities for Citigroup and Walmart
Poor diversification
The 3 months correlation between Citigroup and Walmart is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Citigroup i.e., Citigroup and Walmart go up and down completely randomly.
Pair Corralation between Citigroup and Walmart
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.92 times less return on investment than Walmart. In addition to that, Citigroup is 1.23 times more volatile than Walmart. It trades about 0.06 of its total potential returns per unit of risk. Walmart is currently generating about 0.23 per unit of volatility. If you would invest 2,130 in Walmart on August 25, 2024 and sell it today you would earn a total of 1,160 from holding Walmart or generate 54.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Citigroup vs. Walmart
Performance |
| Timeline |
| Citigroup |
| Walmart |
Citigroup and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Walmart
The main advantage of trading using opposite Citigroup and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Walmart vs. Fras le SA | Walmart vs. Clave Indices De | Walmart vs. BTG Pactual Logstica | Walmart vs. Telefonaktiebolaget LM Ericsson |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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