Correlation Between Citigroup and Hamat
Can any of the company-specific risk be diversified away by investing in both Citigroup and Hamat 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 Hamat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Hamat Group, you can compare the effects of market volatilities on Citigroup and Hamat 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 Hamat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Hamat.
Diversification Opportunities for Citigroup and Hamat
Poor diversification
The 3 months correlation between Citigroup and Hamat is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hamat Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamat 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 Hamat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamat Group has no effect on the direction of Citigroup i.e., Citigroup and Hamat go up and down completely randomly.
Pair Corralation between Citigroup and Hamat
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.52 times more return on investment than Hamat. However, Citigroup is 1.92 times less risky than Hamat. It trades about 0.22 of its potential returns per unit of risk. Hamat Group is currently generating about 0.06 per unit of risk. If you would invest 5,346 in Citigroup on February 11, 2024 and sell it today you would earn a total of 1,007 from holding Citigroup or generate 18.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.78% |
| Values | Daily Returns |
Citigroup vs. Hamat Group
Performance |
| Timeline |
| Citigroup |
| Hamat Group |
Citigroup and Hamat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Hamat
The main advantage of trading using opposite Citigroup and Hamat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Hamat 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 Hamat will offset losses from the drop in Hamat's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Hamat vs. Clal Insurance Enterprises | Hamat vs. Israel Discount Bank | Hamat vs. Migdal Insurance | Hamat vs. Bezeq Israeli Telecommunication |
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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