Correlation Between Citigroup and Brand
Can any of the company-specific risk be diversified away by investing in both Citigroup and Brand 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 Brand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Brand Group, you can compare the effects of market volatilities on Citigroup and Brand 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 Brand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Brand.
Diversification Opportunities for Citigroup and Brand
Very weak diversification
The 3 months correlation between Citigroup and Brand is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Brand Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brand Group 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 Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brand Group has no effect on the direction of Citigroup i.e., Citigroup and Brand go up and down completely randomly.
Pair Corralation between Citigroup and Brand
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.68 times more return on investment than Brand. However, Citigroup is 1.48 times less risky than Brand. It trades about 0.07 of its potential returns per unit of risk. Brand Group is currently generating about 0.02 per unit of risk. If you would invest 4,117 in Citigroup on August 28, 2024 and sell it today you would earn a total of 2,958 from holding Citigroup or generate 71.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.78% |
| Values | Daily Returns |
Citigroup vs. Brand Group
Performance |
| Timeline |
| Citigroup |
| Brand Group |
Citigroup and Brand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Brand
The main advantage of trading using opposite Citigroup and Brand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Brand 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 Brand will offset losses from the drop in Brand's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| Brand vs. Payment Financial Technologies | Brand vs. Hiron Trade Investments Industrial | Brand vs. Harel Insurance Investments | Brand vs. Blender Financial Technologies |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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