Correlation Between Citigroup and Avanza Bank
Can any of the company-specific risk be diversified away by investing in both Citigroup and Avanza Bank 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 Avanza Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Avanza Bank Holding, you can compare the effects of market volatilities on Citigroup and Avanza Bank 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 Avanza Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Avanza Bank.
Diversification Opportunities for Citigroup and Avanza Bank
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Avanza is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Avanza Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanza Bank Holding 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 Avanza Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanza Bank Holding has no effect on the direction of Citigroup i.e., Citigroup and Avanza Bank go up and down completely randomly.
Pair Corralation between Citigroup and Avanza Bank
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.86 times more return on investment than Avanza Bank. However, Citigroup is 1.17 times less risky than Avanza Bank. It trades about 0.09 of its potential returns per unit of risk. Avanza Bank Holding is currently generating about 0.01 per unit of risk. If you would invest 4,350 in Citigroup on August 27, 2024 and sell it today you would earn a total of 2,634 from holding Citigroup or generate 60.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Citigroup vs. Avanza Bank Holding
Performance |
| Timeline |
| Citigroup |
| Avanza Bank Holding |
Citigroup and Avanza Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Avanza Bank
The main advantage of trading using opposite Citigroup and Avanza Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Avanza Bank 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 Avanza Bank will offset losses from the drop in Avanza Bank's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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