Correlation Between Citigroup and Biofrontera Warrants
Can any of the company-specific risk be diversified away by investing in both Citigroup and Biofrontera Warrants 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 Biofrontera Warrants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Biofrontera Warrants, you can compare the effects of market volatilities on Citigroup and Biofrontera Warrants 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 Biofrontera Warrants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Biofrontera Warrants.
Diversification Opportunities for Citigroup and Biofrontera Warrants
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Biofrontera is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Biofrontera Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera Warrants 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 Biofrontera Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera Warrants has no effect on the direction of Citigroup i.e., Citigroup and Biofrontera Warrants go up and down completely randomly.
Pair Corralation between Citigroup and Biofrontera Warrants
Taking into account the 90-day investment horizon Citigroup is expected to generate 47.17 times less return on investment than Biofrontera Warrants. But when comparing it to its historical volatility, Citigroup is 44.59 times less risky than Biofrontera Warrants. It trades about 0.21 of its potential returns per unit of risk. Biofrontera Warrants is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3.90 in Biofrontera Warrants on August 29, 2024 and sell it today you would earn a total of 4.64 from holding Biofrontera Warrants or generate 118.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Citigroup vs. Biofrontera Warrants
Performance |
| Timeline |
| Citigroup |
| Biofrontera Warrants |
Citigroup and Biofrontera Warrants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Biofrontera Warrants
The main advantage of trading using opposite Citigroup and Biofrontera Warrants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Biofrontera Warrants 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 Biofrontera Warrants will offset losses from the drop in Biofrontera Warrants' long position.The idea behind Citigroup and Biofrontera Warrants pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Biofrontera Warrants vs. Biofrontera | Biofrontera Warrants vs. Pasithea Therapeutics Corp | Biofrontera Warrants vs. Inspira Technologies Oxy | Biofrontera Warrants vs. Bluejay Diagnostics |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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