Correlation Between Citigroup and Aerodrome
Can any of the company-specific risk be diversified away by investing in both Citigroup and Aerodrome 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 Aerodrome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Aerodrome Group, you can compare the effects of market volatilities on Citigroup and Aerodrome 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 Aerodrome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Aerodrome.
Diversification Opportunities for Citigroup and Aerodrome
Very weak diversification
The 3 months correlation between Citigroup and Aerodrome is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aerodrome Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerodrome Group 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 Aerodrome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerodrome Group has no effect on the direction of Citigroup i.e., Citigroup and Aerodrome go up and down completely randomly.
Pair Corralation between Citigroup and Aerodrome
Taking into account the 90-day investment horizon Citigroup is expected to generate 5.91 times less return on investment than Aerodrome. But when comparing it to its historical volatility, Citigroup is 3.33 times less risky than Aerodrome. It trades about 0.09 of its potential returns per unit of risk. Aerodrome Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 7,670 in Aerodrome Group on January 25, 2024 and sell it today you would earn a total of 1,000.00 from holding Aerodrome Group or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Citigroup vs. Aerodrome Group
Performance |
| Timeline |
| Citigroup |
| Aerodrome Group |
Citigroup and Aerodrome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Aerodrome
The main advantage of trading using opposite Citigroup and Aerodrome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Aerodrome 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 Aerodrome will offset losses from the drop in Aerodrome's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Aerodrome vs. Bank Leumi Le Israel | Aerodrome vs. Teva Pharmaceutical Industries | Aerodrome vs. Bank Hapoalim | Aerodrome vs. Elbit 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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