Correlation Between Realty Income and Citigroup
Can any of the company-specific risk be diversified away by investing in both Realty Income 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 Realty Income and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income Corp and Citigroup, you can compare the effects of market volatilities on Realty Income 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 Realty Income with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Citigroup.
Diversification Opportunities for Realty Income and Citigroup
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Realty and Citigroup is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income Corp and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Realty Income 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 Realty Income Corp 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 Realty Income i.e., Realty Income and Citigroup go up and down completely randomly.
Pair Corralation between Realty Income and Citigroup
Taking into account the 90-day investment horizon Realty Income is expected to generate 3.62 times less return on investment than Citigroup. But when comparing it to its historical volatility, Realty Income Corp is 1.19 times less risky than Citigroup. It trades about 0.18 of its potential returns per unit of risk. Citigroup is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest 5,571 in Citigroup on December 29, 2023 and sell it today you would earn a total of 704.00 from holding Citigroup or generate 12.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Realty Income Corp vs. Citigroup
Performance |
Timeline |
Realty me Corp |
Citigroup |
Realty Income and Citigroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Realty Income and Citigroup
The main advantage of trading using opposite Realty Income and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income 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.Realty Income vs. Sphere Entertainment Co | Realty Income vs. Diageo PLC ADR | Realty Income vs. Fevertree Drinks Plc | Realty Income vs. Weibo Corp |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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