Correlation Between Fossil and Citigroup
Can any of the company-specific risk be diversified away by investing in both Fossil 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 Fossil and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fossil Group and Citigroup, you can compare the effects of market volatilities on Fossil 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 Fossil with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fossil and Citigroup.
Diversification Opportunities for Fossil and Citigroup
Excellent diversification
The 3 months correlation between Fossil and Citigroup is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fossil Group and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Fossil 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 Fossil Group 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 Fossil i.e., Fossil and Citigroup go up and down completely randomly.
Pair Corralation between Fossil and Citigroup
Given the investment horizon of 90 days Fossil Group is expected to under-perform the Citigroup. In addition to that, Fossil is 4.0 times more volatile than Citigroup. It trades about -0.06 of its total potential returns per unit of risk. Citigroup is currently generating about 0.3 per unit of volatility. If you would invest 3,739 in Citigroup on January 25, 2024 and sell it today you would earn a total of 2,508 from holding Citigroup or generate 67.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fossil Group vs. Citigroup
Performance |
| Timeline |
| Fossil Group |
| Citigroup |
Fossil and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fossil and Citigroup
The main advantage of trading using opposite Fossil and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fossil 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.The idea behind Fossil Group and Citigroup pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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