Correlation Between Citigroup and Brainsway
Can any of the company-specific risk be diversified away by investing in both Citigroup and Brainsway 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 Brainsway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Brainsway, you can compare the effects of market volatilities on Citigroup and Brainsway 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 Brainsway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Brainsway.
Diversification Opportunities for Citigroup and Brainsway
Poor diversification
The 3 months correlation between Citigroup and Brainsway is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway 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 Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of Citigroup i.e., Citigroup and Brainsway go up and down completely randomly.
Pair Corralation between Citigroup and Brainsway
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.37 times less return on investment than Brainsway. But when comparing it to its historical volatility, Citigroup is 2.35 times less risky than Brainsway. It trades about 0.11 of its potential returns per unit of risk. Brainsway is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 625.00 in Brainsway on August 29, 2024 and sell it today you would earn a total of 343.00 from holding Brainsway or generate 54.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Brainsway
Performance |
| Timeline |
| Citigroup |
| Brainsway |
Citigroup and Brainsway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Brainsway
The main advantage of trading using opposite Citigroup and Brainsway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Brainsway 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 Brainsway will offset losses from the drop in Brainsway's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Brainsway vs. Delcath Systems | Brainsway vs. Paragon 28 | Brainsway vs. USA Equities Corp | Brainsway vs. Venus Concept |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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