Correlation Between Citigroup and ZIM Integrated
Can any of the company-specific risk be diversified away by investing in both Citigroup and ZIM Integrated 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 ZIM Integrated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and ZIM Integrated Shipping, you can compare the effects of market volatilities on Citigroup and ZIM Integrated 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 ZIM Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and ZIM Integrated.
Diversification Opportunities for Citigroup and ZIM Integrated
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and ZIM is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ZIM Integrated Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIM Integrated Shipping 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 ZIM Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIM Integrated Shipping has no effect on the direction of Citigroup i.e., Citigroup and ZIM Integrated go up and down completely randomly.
Pair Corralation between Citigroup and ZIM Integrated
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.83 times less return on investment than ZIM Integrated. But when comparing it to its historical volatility, Citigroup is 3.23 times less risky than ZIM Integrated. It trades about 0.09 of its potential returns per unit of risk. ZIM Integrated Shipping is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 941.00 in ZIM Integrated Shipping on September 1, 2024 and sell it today you would earn a total of 1,196 from holding ZIM Integrated Shipping or generate 127.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.92% |
| Values | Daily Returns |
Citigroup vs. ZIM Integrated Shipping
Performance |
| Timeline |
| Citigroup |
| ZIM Integrated Shipping |
Citigroup and ZIM Integrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and ZIM Integrated
The main advantage of trading using opposite Citigroup and ZIM Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, ZIM Integrated 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 ZIM Integrated will offset losses from the drop in ZIM Integrated's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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