Correlation Between Citigroup and Amazon

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Can any of the company-specific risk be diversified away by investing in both Citigroup and Amazon 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 Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Amazon Inc, you can compare the effects of market volatilities on Citigroup and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Amazon.

Diversification Opportunities for Citigroup and Amazon

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Citigroup and Amazon is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Citigroup i.e., Citigroup and Amazon go up and down completely randomly.

Pair Corralation between Citigroup and Amazon

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.77 times more return on investment than Amazon. However, Citigroup is 1.3 times less risky than Amazon. It trades about -0.01 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.04 per unit of risk. If you would invest  5,510  in Citigroup on September 9, 2022 and sell it today you would lose (1,043)  from holding Citigroup or give up 18.93% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  Amazon Inc

 Performance (%) 
       Timeline  
Citigroup 
Citigroup Performance
0 of 100
Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Citigroup Price Channel

Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Citigroup and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Amazon

The main advantage of trading using opposite Citigroup and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.
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The idea behind Citigroup and Amazon Inc 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.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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