Correlation Between Citigroup and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both Citigroup and Teradata Corp 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 Teradata Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Teradata Corp, you can compare the effects of market volatilities on Citigroup and Teradata Corp 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 Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Teradata Corp.
Diversification Opportunities for Citigroup and Teradata Corp
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Teradata is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Citigroup i.e., Citigroup and Teradata Corp go up and down completely randomly.
Pair Corralation between Citigroup and Teradata Corp
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.63 times more return on investment than Teradata Corp. However, Citigroup is 1.6 times less risky than Teradata Corp. It trades about 0.18 of its potential returns per unit of risk. Teradata Corp is currently generating about -0.06 per unit of risk. If you would invest 8,523 in Citigroup on June 9, 2025 and sell it today you would earn a total of 1,017 from holding Citigroup or generate 11.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Teradata Corp
Performance |
| Timeline |
| Citigroup |
| Teradata Corp |
Citigroup and Teradata Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Teradata Corp
The main advantage of trading using opposite Citigroup and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.The idea behind Citigroup and Teradata Corp 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.| Teradata Corp vs. CommVault Systems | Teradata Corp vs. Five9 Inc | Teradata Corp vs. Informatica | Teradata Corp vs. Qualys Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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