Correlation Between Citigroup and Unconstrained Emerging
Can any of the company-specific risk be diversified away by investing in both Citigroup and Unconstrained Emerging 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 Unconstrained Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Unconstrained Emerging Markets, you can compare the effects of market volatilities on Citigroup and Unconstrained Emerging 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 Unconstrained Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Unconstrained Emerging.
Diversification Opportunities for Citigroup and Unconstrained Emerging
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Unconstrained is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Unconstrained Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unconstrained 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 Unconstrained Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unconstrained Emerging has no effect on the direction of Citigroup i.e., Citigroup and Unconstrained Emerging go up and down completely randomly.
Pair Corralation between Citigroup and Unconstrained Emerging
Taking into account the 90-day investment horizon Citigroup is expected to generate 5.54 times more return on investment than Unconstrained Emerging. However, Citigroup is 5.54 times more volatile than Unconstrained Emerging Markets. It trades about 0.16 of its potential returns per unit of risk. Unconstrained Emerging Markets is currently generating about -0.17 per unit of risk. If you would invest 6,083 in Citigroup on August 25, 2024 and sell it today you would earn a total of 901.00 from holding Citigroup or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Unconstrained Emerging Markets
Performance |
| Timeline |
| Citigroup |
| Unconstrained Emerging |
Citigroup and Unconstrained Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Unconstrained Emerging
The main advantage of trading using opposite Citigroup and Unconstrained Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Unconstrained Emerging 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 Unconstrained Emerging will offset losses from the drop in Unconstrained Emerging's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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