Correlation Between Citigroup and Blackline
Can any of the company-specific risk be diversified away by investing in both Citigroup and Blackline 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 Blackline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Blackline, you can compare the effects of market volatilities on Citigroup and Blackline 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 Blackline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Blackline.
Diversification Opportunities for Citigroup and Blackline
Very poor diversification
The 3 months correlation between Citigroup and Blackline is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Blackline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackline 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 Blackline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackline has no effect on the direction of Citigroup i.e., Citigroup and Blackline go up and down completely randomly.
Pair Corralation between Citigroup and Blackline
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.66 times more return on investment than Blackline. However, Citigroup is 1.51 times less risky than Blackline. It trades about 0.07 of its potential returns per unit of risk. Blackline is currently generating about 0.01 per unit of risk. If you would invest 4,206 in Citigroup on August 24, 2024 and sell it today you would earn a total of 2,689 from holding Citigroup or generate 63.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Blackline
Performance |
| Timeline |
| Citigroup |
| Blackline |
Citigroup and Blackline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Blackline
The main advantage of trading using opposite Citigroup and Blackline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Blackline 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 Blackline will offset losses from the drop in Blackline's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Blackline vs. Alkami Technology | Blackline vs. Paycor HCM | Blackline vs. Procore Technologies | Blackline vs. Enfusion |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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