Correlation Between Citigroup and Danaher
Can any of the company-specific risk be diversified away by investing in both Citigroup and Danaher 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 Danaher into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Danaher, you can compare the effects of market volatilities on Citigroup and Danaher 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 Danaher. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Danaher.
Diversification Opportunities for Citigroup and Danaher
Pay attention - limited upside
The 3 months correlation between Citigroup and Danaher is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Danaher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaher 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 Danaher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaher has no effect on the direction of Citigroup i.e., Citigroup and Danaher go up and down completely randomly.
Pair Corralation between Citigroup and Danaher
Assuming the 90 days trading horizon Citigroup is expected to generate 1.05 times more return on investment than Danaher. However, Citigroup is 1.05 times more volatile than Danaher. It trades about 0.17 of its potential returns per unit of risk. Danaher is currently generating about -0.03 per unit of risk. If you would invest 5,794 in Citigroup on September 2, 2024 and sell it today you would earn a total of 1,314 from holding Citigroup or generate 22.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Danaher
Performance |
| Timeline |
| Citigroup |
| Danaher |
Citigroup and Danaher Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Danaher
The main advantage of trading using opposite Citigroup and Danaher positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Danaher 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 Danaher will offset losses from the drop in Danaher's long position.| Citigroup vs. New Oriental Education | Citigroup vs. salesforce inc | Citigroup vs. Tyson Foods | Citigroup vs. Apartment Investment and |
| Danaher vs. Tres Tentos Agroindustrial | Danaher vs. Metalrgica Riosulense SA | Danaher vs. Hospital Mater Dei | Danaher vs. Marfrig Global Foods |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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