Correlation Between Citigroup and Biomarin Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Citigroup and Biomarin Pharmaceutical 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 Biomarin Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Biomarin Pharmaceutical, you can compare the effects of market volatilities on Citigroup and Biomarin Pharmaceutical 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 Biomarin Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Biomarin Pharmaceutical.
Diversification Opportunities for Citigroup and Biomarin Pharmaceutical
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Biomarin is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Biomarin Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomarin Pharmaceutical 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 Biomarin Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomarin Pharmaceutical has no effect on the direction of Citigroup i.e., Citigroup and Biomarin Pharmaceutical go up and down completely randomly.
Pair Corralation between Citigroup and Biomarin Pharmaceutical
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.3 times more return on investment than Biomarin Pharmaceutical. However, Citigroup is 1.3 times more volatile than Biomarin Pharmaceutical. It trades about 0.25 of its potential returns per unit of risk. Biomarin Pharmaceutical is currently generating about -0.21 per unit of risk. If you would invest 6,360 in Citigroup on August 27, 2024 and sell it today you would earn a total of 715.00 from holding Citigroup or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Biomarin Pharmaceutical
Performance |
| Timeline |
| Citigroup |
| Biomarin Pharmaceutical |
Citigroup and Biomarin Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Biomarin Pharmaceutical
The main advantage of trading using opposite Citigroup and Biomarin Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Biomarin Pharmaceutical 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 Biomarin Pharmaceutical will offset losses from the drop in Biomarin Pharmaceutical's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| Biomarin Pharmaceutical vs. Alnylam Pharmaceuticals | Biomarin Pharmaceutical vs. Exelixis | Biomarin Pharmaceutical vs. Halozyme Therapeutics | Biomarin Pharmaceutical vs. Arrowhead Pharmaceuticals |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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