Correlation Between Citigroup and Bonheur
Can any of the company-specific risk be diversified away by investing in both Citigroup and Bonheur 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 Bonheur into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Bonheur, you can compare the effects of market volatilities on Citigroup and Bonheur 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 Bonheur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Bonheur.
Diversification Opportunities for Citigroup and Bonheur
Good diversification
The 3 months correlation between Citigroup and Bonheur is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Bonheur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonheur 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 Bonheur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonheur has no effect on the direction of Citigroup i.e., Citigroup and Bonheur go up and down completely randomly.
Pair Corralation between Citigroup and Bonheur
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.57 times more return on investment than Bonheur. However, Citigroup is 1.57 times more volatile than Bonheur. It trades about 0.24 of its potential returns per unit of risk. Bonheur is currently generating about -0.16 per unit of risk. If you would invest 6,245 in Citigroup on August 25, 2024 and sell it today you would earn a total of 739.00 from holding Citigroup or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. Bonheur
Performance |
| Timeline |
| Citigroup |
| Bonheur |
Citigroup and Bonheur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Bonheur
The main advantage of trading using opposite Citigroup and Bonheur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Bonheur 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 Bonheur will offset losses from the drop in Bonheur's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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