Correlation Between Citigroup and SHP ETF
Can any of the company-specific risk be diversified away by investing in both Citigroup and SHP 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 SHP ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and SHP ETF Trust, you can compare the effects of market volatilities on Citigroup and SHP 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 SHP ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and SHP ETF.
Diversification Opportunities for Citigroup and SHP ETF
Very poor diversification
The 3 months correlation between Citigroup and SHP is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP 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 SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of Citigroup i.e., Citigroup and SHP ETF go up and down completely randomly.
Pair Corralation between Citigroup and SHP ETF
Taking into account the 90-day investment horizon Citigroup is expected to generate 24.45 times more return on investment than SHP ETF. However, Citigroup is 24.45 times more volatile than SHP ETF Trust. It trades about 0.07 of its potential returns per unit of risk. SHP ETF Trust is currently generating about 0.29 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. SHP ETF Trust
Performance |
| Timeline |
| Citigroup |
| SHP ETF Trust |
Citigroup and SHP ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and SHP ETF
The main advantage of trading using opposite Citigroup and SHP ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, SHP 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 SHP ETF will offset losses from the drop in SHP ETF's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| SHP ETF vs. SHP ETF Trust | SHP ETF vs. SHP ETF Trust | SHP ETF vs. iShares Trust | SHP ETF vs. VanEck ETF Trust |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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