Correlation Between Citigroup and IndexIQ ETF
Can any of the company-specific risk be diversified away by investing in both Citigroup and IndexIQ ETF 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 IndexIQ ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and IndexIQ ETF Trust, you can compare the effects of market volatilities on Citigroup and IndexIQ ETF 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 IndexIQ ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and IndexIQ ETF.
Diversification Opportunities for Citigroup and IndexIQ ETF
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and IndexIQ is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and IndexIQ ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ ETF Trust 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 IndexIQ ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ ETF Trust has no effect on the direction of Citigroup i.e., Citigroup and IndexIQ ETF go up and down completely randomly.
Pair Corralation between Citigroup and IndexIQ ETF
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.65 times more return on investment than IndexIQ ETF. However, Citigroup is 1.65 times more volatile than IndexIQ ETF Trust. It trades about 0.07 of its potential returns per unit of risk. IndexIQ ETF Trust is currently generating about -0.01 per unit of risk. If you would invest 6,079 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,008 from holding Citigroup or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Citigroup vs. IndexIQ ETF Trust
Performance |
| Timeline |
| Citigroup |
| IndexIQ ETF Trust |
Citigroup and IndexIQ ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and IndexIQ ETF
The main advantage of trading using opposite Citigroup and IndexIQ ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, IndexIQ ETF 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 IndexIQ ETF will offset losses from the drop in IndexIQ ETF's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| IndexIQ ETF vs. IndexIQ ETF Trust | IndexIQ ETF vs. ProShares SP Kensho | IndexIQ ETF vs. Invesco Alerian Galaxy |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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