Correlation Between Citigroup and Israel Discount
Can any of the company-specific risk be diversified away by investing in both Citigroup and Israel Discount 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 Israel Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Israel Discount Bank, you can compare the effects of market volatilities on Citigroup and Israel Discount 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 Israel Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Israel Discount.
Diversification Opportunities for Citigroup and Israel Discount
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Israel is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Israel Discount Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Discount Bank 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 Israel Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Discount Bank has no effect on the direction of Citigroup i.e., Citigroup and Israel Discount go up and down completely randomly.
Pair Corralation between Citigroup and Israel Discount
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.83 times more return on investment than Israel Discount. However, Citigroup is 1.2 times less risky than Israel Discount. It trades about 0.07 of its potential returns per unit of risk. Israel Discount Bank is currently generating about 0.04 per unit of risk. If you would invest 4,206 in Citigroup on August 24, 2024 and sell it today you would earn a total of 2,689 from holding Citigroup or generate 63.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 78.02% |
| Values | Daily Returns |
Citigroup vs. Israel Discount Bank
Performance |
| Timeline |
| Citigroup |
| Israel Discount Bank |
Citigroup and Israel Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Israel Discount
The main advantage of trading using opposite Citigroup and Israel Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Israel Discount 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 Israel Discount will offset losses from the drop in Israel Discount's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Israel Discount vs. Bank Leumi Le Israel | Israel Discount vs. Bank Hapoalim | Israel Discount vs. Mizrahi Tefahot | Israel Discount vs. Bezeq Israeli Telecommunication |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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