Correlation Between Tempur Sealy and Citigroup
Can any of the company-specific risk be diversified away by investing in both Tempur Sealy 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 Tempur Sealy and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tempur Sealy International and Citigroup, you can compare the effects of market volatilities on Tempur Sealy 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 Tempur Sealy with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tempur Sealy and Citigroup.
Diversification Opportunities for Tempur Sealy and Citigroup
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tempur and Citigroup is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tempur Sealy International and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Tempur Sealy 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 Tempur Sealy International 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 Tempur Sealy i.e., Tempur Sealy and Citigroup go up and down completely randomly.
Pair Corralation between Tempur Sealy and Citigroup
Considering the 90-day investment horizon Tempur Sealy International is expected to under-perform the Citigroup. In addition to that, Tempur Sealy is 1.37 times more volatile than Citigroup. It trades about -0.01 of its total potential returns per unit of risk. Citigroup is currently generating about 0.11 per unit of volatility. If you would invest 5,542 in Citigroup on January 20, 2024 and sell it today you would earn a total of 290.00 from holding Citigroup or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Tempur Sealy International vs. Citigroup
Performance |
| Timeline |
| Tempur Sealy Interna |
| Citigroup |
Tempur Sealy and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tempur Sealy and Citigroup
The main advantage of trading using opposite Tempur Sealy and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tempur Sealy 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.| Tempur Sealy vs. La Z Boy Incorporated | Tempur Sealy vs. Purple Innovation | Tempur Sealy vs. MasterBrand | Tempur Sealy vs. Ethan Allen Interiors |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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