Correlation Between Unity Software and Citigroup
Can any of the company-specific risk be diversified away by investing in both Unity Software 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 Unity Software and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unity Software and Citigroup, you can compare the effects of market volatilities on Unity Software 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 Unity Software with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Software and Citigroup.
Diversification Opportunities for Unity Software and Citigroup
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Unity and Citigroup is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Unity Software 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 Unity Software 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 Unity Software i.e., Unity Software and Citigroup go up and down completely randomly.
Pair Corralation between Unity Software and Citigroup
Assuming the 90 days trading horizon Unity Software is expected to generate 2.58 times more return on investment than Citigroup. However, Unity Software is 2.58 times more volatile than Citigroup. It trades about 0.17 of its potential returns per unit of risk. Citigroup is currently generating about 0.27 per unit of risk. If you would invest 586.00 in Unity Software on August 27, 2024 and sell it today you would earn a total of 93.00 from holding Unity Software or generate 15.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unity Software vs. Citigroup
Performance |
| Timeline |
| Unity Software |
| Citigroup |
Unity Software and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unity Software and Citigroup
The main advantage of trading using opposite Unity Software and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unity Software 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.| Unity Software vs. Waste Management | Unity Software vs. Lloyds Banking Group | Unity Software vs. Charter Communications | Unity Software vs. Credit Acceptance |
| Citigroup vs. Unity Software | Citigroup vs. Warner Music Group | Citigroup vs. Spotify Technology SA | Citigroup vs. Micron Technology |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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