Correlation Between Citigroup and BetaShares Diversified
Can any of the company-specific risk be diversified away by investing in both Citigroup and BetaShares Diversified 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 BetaShares Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and BetaShares Diversified High, you can compare the effects of market volatilities on Citigroup and BetaShares Diversified 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 BetaShares Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BetaShares Diversified.
Diversification Opportunities for Citigroup and BetaShares Diversified
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and BetaShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BetaShares Diversified High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaShares Diversified 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 BetaShares Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaShares Diversified has no effect on the direction of Citigroup i.e., Citigroup and BetaShares Diversified go up and down completely randomly.
Pair Corralation between Citigroup and BetaShares Diversified
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.1 times more return on investment than BetaShares Diversified. However, Citigroup is 3.1 times more volatile than BetaShares Diversified High. It trades about 0.07 of its potential returns per unit of risk. BetaShares Diversified High is currently generating about 0.15 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 | 98.44% |
| Values | Daily Returns |
Citigroup vs. BetaShares Diversified High
Performance |
| Timeline |
| Citigroup |
| BetaShares Diversified |
Citigroup and BetaShares Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and BetaShares Diversified
The main advantage of trading using opposite Citigroup and BetaShares Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, BetaShares Diversified 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 BetaShares Diversified will offset losses from the drop in BetaShares Diversified's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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