Correlation Between Citigroup and Yellow Cake
Can any of the company-specific risk be diversified away by investing in both Citigroup and Yellow Cake 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 Yellow Cake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Yellow Cake plc, you can compare the effects of market volatilities on Citigroup and Yellow Cake 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 Yellow Cake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Yellow Cake.
Diversification Opportunities for Citigroup and Yellow Cake
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Yellow is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Yellow Cake plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yellow Cake plc 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 Yellow Cake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yellow Cake plc has no effect on the direction of Citigroup i.e., Citigroup and Yellow Cake go up and down completely randomly.
Pair Corralation between Citigroup and Yellow Cake
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.36 times more return on investment than Yellow Cake. However, Citigroup is 2.74 times less risky than Yellow Cake. It trades about 0.32 of its potential returns per unit of risk. Yellow Cake plc is currently generating about 0.01 per unit of risk. If you would invest 6,235 in Citigroup on September 5, 2024 and sell it today you would earn a total of 915.00 from holding Citigroup or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Yellow Cake plc
Performance |
| Timeline |
| Citigroup |
| Yellow Cake plc |
Citigroup and Yellow Cake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Yellow Cake
The main advantage of trading using opposite Citigroup and Yellow Cake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Yellow Cake 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 Yellow Cake will offset losses from the drop in Yellow Cake's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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