Correlation Between Citigroup and BROOKFBH 462
Can any of the company-specific risk be diversified away by investing in both Citigroup and BROOKFBH 462 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 BROOKFBH 462 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and BROOKFBH 462 PRSNU, you can compare the effects of market volatilities on Citigroup and BROOKFBH 462 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 BROOKFBH 462. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BROOKFBH 462.
Diversification Opportunities for Citigroup and BROOKFBH 462
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and BROOKFBH is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BROOKFBH 462 PRSNU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROOKFBH 462 PRSNU 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 BROOKFBH 462. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROOKFBH 462 PRSNU has no effect on the direction of Citigroup i.e., Citigroup and BROOKFBH 462 go up and down completely randomly.
Pair Corralation between Citigroup and BROOKFBH 462
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.53 times more return on investment than BROOKFBH 462. However, Citigroup is 1.87 times less risky than BROOKFBH 462. It trades about 0.21 of its potential returns per unit of risk. BROOKFBH 462 PRSNU is currently generating about 0.03 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Citigroup vs. BROOKFBH 462 PRSNU
Performance |
| Timeline |
| Citigroup |
| BROOKFBH 462 PRSNU |
Citigroup and BROOKFBH 462 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and BROOKFBH 462
The main advantage of trading using opposite Citigroup and BROOKFBH 462 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, BROOKFBH 462 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 BROOKFBH 462 will offset losses from the drop in BROOKFBH 462's long position.The idea behind Citigroup and BROOKFBH 462 PRSNU 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.| BROOKFBH 462 vs. FORMPIPE SOFTWARE AB | BROOKFBH 462 vs. Sqs Software Quality | BROOKFBH 462 vs. Eidesvik Offshore ASA | BROOKFBH 462 vs. Sixt Leasing SE |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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