Correlation Between Citigroup and BCPG Public
Can any of the company-specific risk be diversified away by investing in both Citigroup and BCPG Public 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 BCPG Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and BCPG Public, you can compare the effects of market volatilities on Citigroup and BCPG Public 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 BCPG Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BCPG Public.
Diversification Opportunities for Citigroup and BCPG Public
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and BCPG is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BCPG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCPG Public 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 BCPG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCPG Public has no effect on the direction of Citigroup i.e., Citigroup and BCPG Public go up and down completely randomly.
Pair Corralation between Citigroup and BCPG Public
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.21 times less return on investment than BCPG Public. But when comparing it to its historical volatility, Citigroup is 1.39 times less risky than BCPG Public. It trades about 0.13 of its potential returns per unit of risk. BCPG Public is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 630.00 in BCPG Public on November 22, 2024 and sell it today you would earn a total of 75.00 from holding BCPG Public or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. BCPG Public
Performance |
| Timeline |
| Citigroup |
| BCPG Public |
Citigroup and BCPG Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and BCPG Public
The main advantage of trading using opposite Citigroup and BCPG Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, BCPG Public 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 BCPG Public will offset losses from the drop in BCPG Public'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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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