This module allows you to analyze existing cross correlation between Citigroup and Best Buy Co. You can compare the effects of market volatilities on Citigroup and Best Buy 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 Best Buy. See also your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Best Buy.
Taking into account the 30 trading days horizon, Citigroup is expected to generate 0.59 times more return on investment than Best Buy. However, Citigroup is 1.7 times less risky than Best Buy. It trades about 0.02 of its potential returns per unit of risk. Best Buy Co is currently generating about -0.07 per unit of risk. If you would invest 6,912 in Citigroup on April 24, 2018 and sell it today you would earn a total of 25.00 from holding Citigroup or generate 0.36% return on investment over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding Citigroup Inc and Best Buy Co Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Best Buy Co 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 Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy Co has no effect on the direction of Citigroup i.e. Citigroup and Best Buy go up and down completely randomly.
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