Correlation Between Citigroup and Trade Desk
Can any of the company-specific risk be diversified away by investing in both Citigroup and Trade Desk 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 Trade Desk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and The Trade Desk, you can compare the effects of market volatilities on Citigroup and Trade Desk 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 Trade Desk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Trade Desk.
Diversification Opportunities for Citigroup and Trade Desk
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Trade is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk 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 Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Citigroup i.e., Citigroup and Trade Desk go up and down completely randomly.
Pair Corralation between Citigroup and Trade Desk
Assuming the 90 days trading horizon Citigroup is expected to generate 1.15 times less return on investment than Trade Desk. But when comparing it to its historical volatility, Citigroup is 2.75 times less risky than Trade Desk. It trades about 0.33 of its potential returns per unit of risk. The Trade Desk is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 748.00 in The Trade Desk on September 14, 2024 and sell it today you would earn a total of 59.00 from holding The Trade Desk or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. The Trade Desk
Performance |
| Timeline |
| Citigroup |
| Trade Desk |
Citigroup and Trade Desk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Trade Desk
The main advantage of trading using opposite Citigroup and Trade Desk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Trade Desk 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 Trade Desk will offset losses from the drop in Trade Desk's long position.| Citigroup vs. Cognizant Technology Solutions | Citigroup vs. Tyson Foods | Citigroup vs. Raytheon Technologies | Citigroup vs. Zoom Video Communications |
| Trade Desk vs. ServiceNow | Trade Desk vs. Uber Technologies | Trade Desk vs. Shopify | Trade Desk vs. Autodesk |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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