Correlation Between Citigroup and DR Horton
Can any of the company-specific risk be diversified away by investing in both Citigroup and DR Horton 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 DR Horton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and DR Horton, you can compare the effects of market volatilities on Citigroup and DR Horton 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 DR Horton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and DR Horton.
Diversification Opportunities for Citigroup and DR Horton
Excellent diversification
The 3 months correlation between Citigroup and HO2 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and DR Horton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DR Horton 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 DR Horton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DR Horton has no effect on the direction of Citigroup i.e., Citigroup and DR Horton go up and down completely randomly.
Pair Corralation between Citigroup and DR Horton
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.03 times less return on investment than DR Horton. But when comparing it to its historical volatility, Citigroup is 1.27 times less risky than DR Horton. It trades about 0.07 of its potential returns per unit of risk. DR Horton is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,285 in DR Horton on September 23, 2024 and sell it today you would earn a total of 5,125 from holding DR Horton or generate 61.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.03% |
Values | Daily Returns |
Citigroup vs. DR Horton
Performance |
Timeline |
Citigroup |
DR Horton |
Citigroup and DR Horton Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and DR Horton
The main advantage of trading using opposite Citigroup and DR Horton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, DR Horton 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 DR Horton will offset losses from the drop in DR Horton's long position.Citigroup vs. Nu Holdings | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
DR Horton vs. MUTUIONLINE | DR Horton vs. CARSALESCOM | DR Horton vs. Mobilezone Holding AG | DR Horton vs. YATRA ONLINE DL 0001 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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