Correlation Between Citigroup and Belite Bio
Can any of the company-specific risk be diversified away by investing in both Citigroup and Belite Bio 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 Belite Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Belite Bio ADR, you can compare the effects of market volatilities on Citigroup and Belite Bio 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 Belite Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Belite Bio.
Diversification Opportunities for Citigroup and Belite Bio
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Belite is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Belite Bio ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belite Bio ADR 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 Belite Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belite Bio ADR has no effect on the direction of Citigroup i.e., Citigroup and Belite Bio go up and down completely randomly.
Pair Corralation between Citigroup and Belite Bio
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.83 times less return on investment than Belite Bio. But when comparing it to its historical volatility, Citigroup is 1.66 times less risky than Belite Bio. It trades about 0.07 of its potential returns per unit of risk. Belite Bio ADR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,885 in Belite Bio ADR on September 1, 2024 and sell it today you would earn a total of 1,441 from holding Belite Bio ADR or generate 29.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Belite Bio ADR
Performance |
| Timeline |
| Citigroup |
| Belite Bio ADR |
Citigroup and Belite Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Belite Bio
The main advantage of trading using opposite Citigroup and Belite Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Belite Bio 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 Belite Bio will offset losses from the drop in Belite Bio's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Belite Bio vs. Anebulo Pharmaceuticals | Belite Bio vs. Mineralys Therapeutics, Common | Belite Bio vs. AN2 Therapeutics | Belite Bio vs. Aerovate Therapeutics |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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