Correlation Between Procter Gamble and Citigroup
Can any of the company-specific risk be diversified away by investing in both Procter Gamble 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 Procter Gamble and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Citigroup, you can compare the effects of market volatilities on Procter Gamble 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 Procter Gamble with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Citigroup.
Diversification Opportunities for Procter Gamble and Citigroup
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Procter and Citigroup is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Procter Gamble 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 Procter Gamble 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 Procter Gamble i.e., Procter Gamble and Citigroup go up and down completely randomly.
Pair Corralation between Procter Gamble and Citigroup
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.99 times less return on investment than Citigroup. But when comparing it to its historical volatility, Procter Gamble is 1.86 times less risky than Citigroup. It trades about 0.08 of its potential returns per unit of risk. Citigroup is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,095 in Citigroup on January 24, 2024 and sell it today you would earn a total of 172.00 from holding Citigroup or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Citigroup
Performance |
| Timeline |
| Procter Gamble |
| Citigroup |
Procter Gamble and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Citigroup
The main advantage of trading using opposite Procter Gamble and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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