Correlation Between Citigroup and BASF SE
Can any of the company-specific risk be diversified away by investing in both Citigroup and BASF SE 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 BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and BASF SE NA, you can compare the effects of market volatilities on Citigroup and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BASF SE.
Diversification Opportunities for Citigroup and BASF SE
Excellent diversification
The 3 months correlation between Citigroup and BASF is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BASF SE NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE NA 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE NA has no effect on the direction of Citigroup i.e., Citigroup and BASF SE go up and down completely randomly.
Pair Corralation between Citigroup and BASF SE
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.67 times more return on investment than BASF SE. However, Citigroup is 1.49 times less risky than BASF SE. It trades about 0.27 of its potential returns per unit of risk. BASF SE NA is currently generating about -0.06 per unit of risk. If you would invest 6,315 in Citigroup on September 2, 2024 and sell it today you would earn a total of 772.00 from holding Citigroup or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. BASF SE NA
Performance |
| Timeline |
| Citigroup |
| BASF SE NA |
Citigroup and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and BASF SE
The main advantage of trading using opposite Citigroup and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. BASF SE ADR | BASF SE vs. Braskem SA Class | BASF SE vs. Celanese |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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