Correlation Between Citigroup and Beijing Enterprises
Can any of the company-specific risk be diversified away by investing in both Citigroup and Beijing Enterprises 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 Beijing Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Beijing Enterprises Water, you can compare the effects of market volatilities on Citigroup and Beijing Enterprises 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 Beijing Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Beijing Enterprises.
Diversification Opportunities for Citigroup and Beijing Enterprises
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and Beijing is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Beijing Enterprises Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Enterprises Water 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 Beijing Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Enterprises Water has no effect on the direction of Citigroup i.e., Citigroup and Beijing Enterprises go up and down completely randomly.
Pair Corralation between Citigroup and Beijing Enterprises
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.67 times more return on investment than Beijing Enterprises. However, Citigroup is 1.49 times less risky than Beijing Enterprises. It trades about 0.16 of its potential returns per unit of risk. Beijing Enterprises Water is currently generating about 0.09 per unit of risk. If you would invest 6,083 in Citigroup on August 25, 2024 and sell it today you would earn a total of 901.00 from holding Citigroup or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Beijing Enterprises Water
Performance |
| Timeline |
| Citigroup |
| Beijing Enterprises Water |
Citigroup and Beijing Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Beijing Enterprises
The main advantage of trading using opposite Citigroup and Beijing Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Beijing Enterprises 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 Beijing Enterprises will offset losses from the drop in Beijing Enterprises' long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Beijing Enterprises vs. Artesian Resources | Beijing Enterprises vs. Global Water Resources | Beijing Enterprises vs. Essential Utilities | Beijing Enterprises vs. American Water Works |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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