Correlation Between Citigroup and BQE Water
Can any of the company-specific risk be diversified away by investing in both Citigroup and BQE Water 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 BQE Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and BQE Water, you can compare the effects of market volatilities on Citigroup and BQE Water 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 BQE Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BQE Water.
Diversification Opportunities for Citigroup and BQE Water
Excellent diversification
The 3 months correlation between Citigroup and BQE is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BQE Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BQE Water 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 BQE Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BQE Water has no effect on the direction of Citigroup i.e., Citigroup and BQE Water go up and down completely randomly.
Pair Corralation between Citigroup and BQE Water
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.57 times more return on investment than BQE Water. However, Citigroup is 1.76 times less risky than BQE Water. It trades about 0.07 of its potential returns per unit of risk. BQE Water is currently generating about -0.02 per unit of risk. If you would invest 6,117 in Citigroup on August 29, 2024 and sell it today you would earn a total of 899.00 from holding Citigroup or generate 14.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Citigroup vs. BQE Water
Performance |
| Timeline |
| Citigroup |
| BQE Water |
Citigroup and BQE Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and BQE Water
The main advantage of trading using opposite Citigroup and BQE Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, BQE Water 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 BQE Water will offset losses from the drop in BQE Water's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| BQE Water vs. Deere Company | BQE Water vs. Columbus McKinnon | BQE Water vs. Hyster Yale Materials Handling | BQE Water vs. Manitowoc |
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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