Correlation Between Citigroup and Lamb Weston
Can any of the company-specific risk be diversified away by investing in both Citigroup and Lamb Weston 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 Lamb Weston into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Lamb Weston Holdings, you can compare the effects of market volatilities on Citigroup and Lamb Weston 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 Lamb Weston. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Lamb Weston.
Diversification Opportunities for Citigroup and Lamb Weston
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Lamb is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lamb Weston Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamb Weston Holdings 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 Lamb Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamb Weston Holdings has no effect on the direction of Citigroup i.e., Citigroup and Lamb Weston go up and down completely randomly.
Pair Corralation between Citigroup and Lamb Weston
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.36 times more return on investment than Lamb Weston. However, Citigroup is 2.77 times less risky than Lamb Weston. It trades about 0.05 of its potential returns per unit of risk. Lamb Weston Holdings is currently generating about -0.21 per unit of risk. If you would invest 6,166 in Citigroup on January 26, 2024 and sell it today you would earn a total of 81.00 from holding Citigroup or generate 1.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. Lamb Weston Holdings
Performance |
Timeline |
Citigroup |
Lamb Weston Holdings |
Citigroup and Lamb Weston Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Lamb Weston
The main advantage of trading using opposite Citigroup and Lamb Weston positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Lamb Weston 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 Lamb Weston will offset losses from the drop in Lamb Weston's long position.Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
Lamb Weston vs. Allegion PLC | Lamb Weston vs. Evergy Common Stock | Lamb Weston vs. Fortive Corp | Lamb Weston vs. IQVIA 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing |