Correlation Between Raytheon Technologies and Citigroup
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Citigroup 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 Raytheon Technologies and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies and Citigroup, you can compare the effects of market volatilities on Raytheon Technologies and Citigroup 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 Raytheon Technologies with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Citigroup.
Diversification Opportunities for Raytheon Technologies and Citigroup
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Raytheon and Citigroup is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Raytheon Technologies 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 Raytheon Technologies are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Citigroup go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Citigroup
Assuming the 90 days trading horizon Raytheon Technologies is expected to generate 1.1 times less return on investment than Citigroup. But when comparing it to its historical volatility, Raytheon Technologies is 1.18 times less risky than Citigroup. It trades about 0.17 of its potential returns per unit of risk. Citigroup is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,579 in Citigroup on September 14, 2024 and sell it today you would earn a total of 3,605 from holding Citigroup or generate 100.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.49% |
| Values | Daily Returns |
Raytheon Technologies vs. Citigroup
Performance |
| Timeline |
| Raytheon Technologies |
| Citigroup |
Raytheon Technologies and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Citigroup
The main advantage of trading using opposite Raytheon Technologies and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.| Raytheon Technologies vs. Paycom Software | Raytheon Technologies vs. Monster Beverage | Raytheon Technologies vs. Zoom Video Communications | Raytheon Technologies vs. Metalurgica Gerdau SA |
| Citigroup vs. Cognizant Technology Solutions | Citigroup vs. Tyson Foods | Citigroup vs. Raytheon Technologies | Citigroup vs. Zoom Video Communications |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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