Correlation Between Citigroup and XAI Octagon
Can any of the company-specific risk be diversified away by investing in both Citigroup and XAI Octagon 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 XAI Octagon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and XAI Octagon Floating, you can compare the effects of market volatilities on Citigroup and XAI Octagon 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 XAI Octagon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and XAI Octagon.
Diversification Opportunities for Citigroup and XAI Octagon
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and XAI is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and XAI Octagon Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAI Octagon Floating 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 XAI Octagon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAI Octagon Floating has no effect on the direction of Citigroup i.e., Citigroup and XAI Octagon go up and down completely randomly.
Pair Corralation between Citigroup and XAI Octagon
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.69 times more return on investment than XAI Octagon. However, Citigroup is 1.69 times more volatile than XAI Octagon Floating. It trades about 0.07 of its potential returns per unit of risk. XAI Octagon Floating is currently generating about 0.08 per unit of risk. If you would invest 4,117 in Citigroup on August 28, 2024 and sell it today you would earn a total of 2,858 from holding Citigroup or generate 69.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. XAI Octagon Floating
Performance |
| Timeline |
| Citigroup |
| XAI Octagon Floating |
Citigroup and XAI Octagon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and XAI Octagon
The main advantage of trading using opposite Citigroup and XAI Octagon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, XAI Octagon 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 XAI Octagon will offset losses from the drop in XAI Octagon's long position.The idea behind Citigroup and XAI Octagon Floating 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.| XAI Octagon vs. Oxford Lane Capital | XAI Octagon vs. Capital Southwest | XAI Octagon vs. Cornerstone Strategic Return | XAI Octagon vs. Cornerstone Strategic Value |
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 CEOs Directory module to screen CEOs from public companies around the world.
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