Correlation Between Citigroup and Diagonal Bio
Can any of the company-specific risk be diversified away by investing in both Citigroup and Diagonal Bio 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 Diagonal Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Diagonal Bio AB, you can compare the effects of market volatilities on Citigroup and Diagonal Bio 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 Diagonal Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Diagonal Bio.
Diversification Opportunities for Citigroup and Diagonal Bio
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Diagonal is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Diagonal Bio AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diagonal Bio AB 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 Diagonal Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diagonal Bio AB has no effect on the direction of Citigroup i.e., Citigroup and Diagonal Bio go up and down completely randomly.
Pair Corralation between Citigroup and Diagonal Bio
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.3 times more return on investment than Diagonal Bio. However, Citigroup is 3.3 times less risky than Diagonal Bio. It trades about 0.21 of its potential returns per unit of risk. Diagonal Bio AB is currently generating about -0.08 per unit of risk. If you would invest 6,412 in Citigroup on August 30, 2024 and sell it today you would earn a total of 604.00 from holding Citigroup or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Diagonal Bio AB
Performance |
| Timeline |
| Citigroup |
| Diagonal Bio AB |
Citigroup and Diagonal Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Diagonal Bio
The main advantage of trading using opposite Citigroup and Diagonal Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Diagonal Bio 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 Diagonal Bio will offset losses from the drop in Diagonal Bio's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Diagonal Bio vs. AstraZeneca PLC | Diagonal Bio vs. Investor AB ser | Diagonal Bio vs. Investor AB ser | Diagonal Bio vs. Atlas Copco AB |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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