Correlation Between Citigroup and Bawat Water
Can any of the company-specific risk be diversified away by investing in both Citigroup and Bawat Water 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 Bawat Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Bawat Water Technologies, you can compare the effects of market volatilities on Citigroup and Bawat Water 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 Bawat Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Bawat Water.
Diversification Opportunities for Citigroup and Bawat Water
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Bawat is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Bawat Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bawat Water Technologies 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 Bawat Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bawat Water Technologies has no effect on the direction of Citigroup i.e., Citigroup and Bawat Water go up and down completely randomly.
Pair Corralation between Citigroup and Bawat Water
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.45 times more return on investment than Bawat Water. However, Citigroup is 2.22 times less risky than Bawat Water. It trades about -0.04 of its potential returns per unit of risk. Bawat Water Technologies is currently generating about -0.13 per unit of risk. If you would invest 8,130 in Citigroup on December 1, 2024 and sell it today you would lose (135.00) from holding Citigroup or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Citigroup vs. Bawat Water Technologies
Performance |
| Timeline |
| Citigroup |
| Bawat Water Technologies |
Citigroup and Bawat Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Bawat Water
The main advantage of trading using opposite Citigroup and Bawat Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Bawat Water 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 Bawat Water will offset losses from the drop in Bawat Water'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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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