Correlation Between Citigroup and Brilliance China
Can any of the company-specific risk be diversified away by investing in both Citigroup and Brilliance China 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 Brilliance China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Brilliance China Automotive, you can compare the effects of market volatilities on Citigroup and Brilliance China 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 Brilliance China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Brilliance China.
Diversification Opportunities for Citigroup and Brilliance China
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Brilliance is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Brilliance China Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brilliance China Aut 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 Brilliance China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brilliance China Aut has no effect on the direction of Citigroup i.e., Citigroup and Brilliance China go up and down completely randomly.
Pair Corralation between Citigroup and Brilliance China
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.04 times more return on investment than Brilliance China. However, Citigroup is 27.86 times less risky than Brilliance China. It trades about 0.07 of its potential returns per unit of risk. Brilliance China Automotive is currently generating about -0.06 per unit of risk. If you would invest 4,381 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,706 from holding Citigroup or generate 61.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 37.24% |
| Values | Daily Returns |
Citigroup vs. Brilliance China Automotive
Performance |
| Timeline |
| Citigroup |
| Brilliance China Aut |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and Brilliance China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Brilliance China
The main advantage of trading using opposite Citigroup and Brilliance China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Brilliance China 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 Brilliance China will offset losses from the drop in Brilliance China's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Brilliance China vs. Asure Software | Brilliance China vs. Reservoir Media | Brilliance China vs. Western Acquisition Ventures | Brilliance China vs. Sphere Entertainment Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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