This module allows you to analyze existing cross correlation between Citigroup and Alphabet. You can compare the effects of market volatilities on Citigroup and Alphabet 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 Alphabet. See also your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Alphabet.
Taking into account the 30 trading days horizon, Citigroup is expected to under-perform the Alphabet. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.14 times less risky than Alphabet. The stock trades about -0.23 of its potential returns per unit of risk. The Alphabet is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 107,932 in Alphabet on November 10, 2018 and sell it today you would lose (4,107) from holding Alphabet or give up 3.81% of portfolio value over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding Citigroup Inc and Alphabet Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Alphabet 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet has no effect on the direction of Citigroup i.e. Citigroup and Alphabet go up and down completely randomly.
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