Correlation Between Citigroup and Heartbeam
Can any of the company-specific risk be diversified away by investing in both Citigroup and Heartbeam 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 Heartbeam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Heartbeam, you can compare the effects of market volatilities on Citigroup and Heartbeam 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 Heartbeam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Heartbeam.
Diversification Opportunities for Citigroup and Heartbeam
Poor diversification
The 3 months correlation between Citigroup and Heartbeam is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Heartbeam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartbeam 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 Heartbeam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartbeam has no effect on the direction of Citigroup i.e., Citigroup and Heartbeam go up and down completely randomly.
Pair Corralation between Citigroup and Heartbeam
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.31 times less return on investment than Heartbeam. But when comparing it to its historical volatility, Citigroup is 2.39 times less risky than Heartbeam. It trades about 0.26 of its potential returns per unit of risk. Heartbeam is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 242.00 in Heartbeam on September 1, 2024 and sell it today you would earn a total of 64.00 from holding Heartbeam or generate 26.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Heartbeam
Performance |
| Timeline |
| Citigroup |
| Heartbeam |
Citigroup and Heartbeam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Heartbeam
The main advantage of trading using opposite Citigroup and Heartbeam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Heartbeam 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 Heartbeam will offset losses from the drop in Heartbeam's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Heartbeam vs. Profound Medical Corp | Heartbeam vs. Si Bone | Heartbeam vs. Sight Sciences | Heartbeam vs. Nevro Corp |
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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