Correlation Between Citigroup and Verint Systems
Can any of the company-specific risk be diversified away by investing in both Citigroup and Verint Systems 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 Verint Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Verint Systems, you can compare the effects of market volatilities on Citigroup and Verint Systems 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 Verint Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Verint Systems.
Diversification Opportunities for Citigroup and Verint Systems
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Verint is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Verint Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verint Systems 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 Verint Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verint Systems has no effect on the direction of Citigroup i.e., Citigroup and Verint Systems go up and down completely randomly.
Pair Corralation between Citigroup and Verint Systems
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.54 times more return on investment than Verint Systems. However, Citigroup is 1.86 times less risky than Verint Systems. It trades about -0.05 of its potential returns per unit of risk. Verint Systems is currently generating about -0.12 per unit of risk. If you would invest 6,013 in Citigroup on January 20, 2024 and sell it today you would lose (99.00) from holding Citigroup or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Verint Systems
Performance |
| Timeline |
| Citigroup |
| Verint Systems |
Citigroup and Verint Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Verint Systems
The main advantage of trading using opposite Citigroup and Verint Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Verint Systems 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 Verint Systems will offset losses from the drop in Verint Systems' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Verint Systems vs. Evertec | Verint Systems vs. CSG Systems International | Verint Systems vs. Radware | Verint Systems vs. NetScout Systems |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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