Correlation Between Citigroup and Curative Biosciences
Can any of the company-specific risk be diversified away by investing in both Citigroup and Curative Biosciences 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 Curative Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Curative Biosciences, you can compare the effects of market volatilities on Citigroup and Curative Biosciences 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 Curative Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Curative Biosciences.
Diversification Opportunities for Citigroup and Curative Biosciences
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Curative is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Curative Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curative Biosciences 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 Curative Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curative Biosciences has no effect on the direction of Citigroup i.e., Citigroup and Curative Biosciences go up and down completely randomly.
Pair Corralation between Citigroup and Curative Biosciences
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.25 times more return on investment than Curative Biosciences. However, Citigroup is 3.94 times less risky than Curative Biosciences. It trades about 0.11 of its potential returns per unit of risk. Curative Biosciences is currently generating about -0.09 per unit of risk. If you would invest 4,567 in Citigroup on August 29, 2024 and sell it today you would earn a total of 2,408 from holding Citigroup or generate 52.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Curative Biosciences
Performance |
| Timeline |
| Citigroup |
| Curative Biosciences |
Citigroup and Curative Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Curative Biosciences
The main advantage of trading using opposite Citigroup and Curative Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Curative Biosciences 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 Curative Biosciences will offset losses from the drop in Curative Biosciences' long position.The idea behind Citigroup and Curative Biosciences pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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