Correlation Between Citigroup and Western Digital
Can any of the company-specific risk be diversified away by investing in both Citigroup and Western Digital 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 Western Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Western Digital, you can compare the effects of market volatilities on Citigroup and Western Digital 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 Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Western Digital.
Diversification Opportunities for Citigroup and Western Digital
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and Western is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital 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 Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of Citigroup i.e., Citigroup and Western Digital go up and down completely randomly.
Pair Corralation between Citigroup and Western Digital
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.77 times more return on investment than Western Digital. However, Citigroup is 1.31 times less risky than Western Digital. It trades about 0.21 of its potential returns per unit of risk. Western Digital is currently generating about 0.12 per unit of risk. If you would invest 6,393 in Citigroup on August 31, 2024 and sell it today you would earn a total of 623.00 from holding Citigroup or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Western Digital
Performance |
| Timeline |
| Citigroup |
| Western Digital |
Citigroup and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Western Digital
The main advantage of trading using opposite Citigroup and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Western Digital 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 Western Digital will offset losses from the drop in Western Digital's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Western Digital vs. RLJ Lodging Trust | Western Digital vs. Aquagold International | Western Digital vs. Stepstone Group | Western Digital vs. Morningstar Unconstrained Allocation |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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