Correlation Between United Parcel and Citigroup
Can any of the company-specific risk be diversified away by investing in both United Parcel 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 United Parcel and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parcel Service and Citigroup, you can compare the effects of market volatilities on United Parcel 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 United Parcel with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Citigroup.
Diversification Opportunities for United Parcel and Citigroup
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Citigroup is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and United Parcel 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 United Parcel Service 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 United Parcel i.e., United Parcel and Citigroup go up and down completely randomly.
Pair Corralation between United Parcel and Citigroup
Considering the 90-day investment horizon United Parcel Service is expected to under-perform the Citigroup. In addition to that, United Parcel is 1.64 times more volatile than Citigroup. It trades about -0.05 of its total potential returns per unit of risk. Citigroup is currently generating about 0.28 per unit of volatility. If you would invest 5,360 in Citigroup on December 29, 2023 and sell it today you would earn a total of 915.00 from holding Citigroup or generate 17.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
United Parcel Service vs. Citigroup
Performance |
Timeline |
United Parcel Service |
Citigroup |
United Parcel and Citigroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Parcel and Citigroup
The main advantage of trading using opposite United Parcel and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel 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.United Parcel vs. Expeditors International | United Parcel vs. Jayud Global Logistics | United Parcel vs. Freightos Limited Warrants | United Parcel vs. JB Hunt Transport |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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