Correlation Between Citigroup and International Stock
Can any of the company-specific risk be diversified away by investing in both Citigroup and International Stock 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 International Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and International Stock Fund, you can compare the effects of market volatilities on Citigroup and International Stock 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 International Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and International Stock.
Diversification Opportunities for Citigroup and International Stock
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and International is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and International Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Stock 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 International Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Stock has no effect on the direction of Citigroup i.e., Citigroup and International Stock go up and down completely randomly.
Pair Corralation between Citigroup and International Stock
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.05 times more return on investment than International Stock. However, Citigroup is 2.05 times more volatile than International Stock Fund. It trades about 0.07 of its potential returns per unit of risk. International Stock Fund is currently generating about -0.04 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 | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Citigroup vs. International Stock Fund
Performance |
| Timeline |
| Citigroup |
| International Stock |
Citigroup and International Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and International Stock
The main advantage of trading using opposite Citigroup and International Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, International Stock 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 International Stock will offset losses from the drop in International Stock's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| International Stock vs. Dreyfusstandish Global Fixed | International Stock vs. Dreyfusstandish Global Fixed | International Stock vs. Dreyfus High Yield | International Stock vs. Dreyfus High Yield |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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