Correlation Between Citigroup and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Citigroup and Australian Unity 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 Australian Unity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Australian Unity Ltd, you can compare the effects of market volatilities on Citigroup and Australian Unity 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 Australian Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Australian Unity.
Diversification Opportunities for Citigroup and Australian Unity
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Australian is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Australian Unity Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity 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 Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity has no effect on the direction of Citigroup i.e., Citigroup and Australian Unity go up and down completely randomly.
Pair Corralation between Citigroup and Australian Unity
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.82 times more return on investment than Australian Unity. However, Citigroup is 1.82 times more volatile than Australian Unity Ltd. It trades about 0.07 of its potential returns per unit of risk. Australian Unity Ltd is currently generating about 0.03 per unit of risk. If you would invest 6,079 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,008 from holding Citigroup or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.92% |
| Values | Daily Returns |
Citigroup vs. Australian Unity Ltd
Performance |
| Timeline |
| Citigroup |
| Australian Unity |
Citigroup and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Australian Unity
The main advantage of trading using opposite Citigroup and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Australian Unity 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 Australian Unity will offset losses from the drop in Australian Unity's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Australian Unity vs. Home Consortium | Australian Unity vs. Clime Investment Management | Australian Unity vs. Argo Investments | Australian Unity vs. Pinnacle Investment Management |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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