Correlation Between Citigroup and CF Acquisition
Can any of the company-specific risk be diversified away by investing in both Citigroup and CF Acquisition 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 CF Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and CF Acquisition IV, you can compare the effects of market volatilities on Citigroup and CF Acquisition 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 CF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and CF Acquisition.
Diversification Opportunities for Citigroup and CF Acquisition
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and CFIV is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CF Acquisition IV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition IV 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 CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition IV has no effect on the direction of Citigroup i.e., Citigroup and CF Acquisition go up and down completely randomly.
Pair Corralation between Citigroup and CF Acquisition
Taking into account the 90-day investment horizon Citigroup is expected to generate 8.8 times more return on investment than CF Acquisition. However, Citigroup is 8.8 times more volatile than CF Acquisition IV. It trades about 0.06 of its potential returns per unit of risk. CF Acquisition IV is currently generating about 0.13 per unit of risk. If you would invest 4,651 in Citigroup on September 1, 2024 and sell it today you would earn a total of 2,436 from holding Citigroup or generate 52.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 25.05% |
| Values | Daily Returns |
Citigroup vs. CF Acquisition IV
Performance |
| Timeline |
| Citigroup |
| CF Acquisition IV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and CF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and CF Acquisition
The main advantage of trading using opposite Citigroup and CF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, CF Acquisition 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 CF Acquisition will offset losses from the drop in CF Acquisition's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| CF Acquisition vs. Finnovate Acquisition Corp | CF Acquisition vs. IX Acquisition Corp | CF Acquisition vs. LatAmGrowth SPAC |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |