Correlation Between Citigroup and Innovator MSCI
Can any of the company-specific risk be diversified away by investing in both Citigroup and Innovator MSCI 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 Innovator MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Innovator MSCI Emerging, you can compare the effects of market volatilities on Citigroup and Innovator MSCI 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 Innovator MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Innovator MSCI.
Diversification Opportunities for Citigroup and Innovator MSCI
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citigroup and Innovator is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Innovator MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator MSCI Emerging 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 Innovator MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator MSCI Emerging has no effect on the direction of Citigroup i.e., Citigroup and Innovator MSCI go up and down completely randomly.
Pair Corralation between Citigroup and Innovator MSCI
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.76 times more return on investment than Innovator MSCI. However, Citigroup is 2.76 times more volatile than Innovator MSCI Emerging. It trades about 0.08 of its potential returns per unit of risk. Innovator MSCI Emerging is currently generating about 0.04 per unit of risk. If you would invest 4,377 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,639 from holding Citigroup or generate 60.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Innovator MSCI Emerging
Performance |
| Timeline |
| Citigroup |
| Innovator MSCI Emerging |
Citigroup and Innovator MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Innovator MSCI
The main advantage of trading using opposite Citigroup and Innovator MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Innovator MSCI 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 Innovator MSCI will offset losses from the drop in Innovator MSCI's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Innovator MSCI vs. Innovator MSCI EAFE | Innovator MSCI vs. Innovator Russell 2000 | Innovator MSCI vs. Innovator Russell 2000 | Innovator MSCI vs. Innovator Nasdaq 100 Power |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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