Correlation Between Citigroup and Xtrackers Emerging
Can any of the company-specific risk be diversified away by investing in both Citigroup and Xtrackers 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 Xtrackers Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Xtrackers Emerging Markets, you can compare the effects of market volatilities on Citigroup and Xtrackers 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 Xtrackers Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Xtrackers Emerging.
Diversification Opportunities for Citigroup and Xtrackers Emerging
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Xtrackers is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Xtrackers Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers 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 Xtrackers Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Emerging has no effect on the direction of Citigroup i.e., Citigroup and Xtrackers Emerging go up and down completely randomly.
Pair Corralation between Citigroup and Xtrackers Emerging
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.85 times more return on investment than Xtrackers Emerging. However, Citigroup is 1.85 times more volatile than Xtrackers Emerging Markets. It trades about 0.26 of its potential returns per unit of risk. Xtrackers Emerging Markets is currently generating about -0.08 per unit of risk. If you would invest 6,361 in Citigroup on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Citigroup or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Xtrackers Emerging Markets
Performance |
| Timeline |
| Citigroup |
| Xtrackers Emerging |
Citigroup and Xtrackers Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Xtrackers Emerging
The main advantage of trading using opposite Citigroup and Xtrackers Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Xtrackers 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 Xtrackers Emerging will offset losses from the drop in Xtrackers Emerging's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Xtrackers Emerging vs. Xtrackers MSCI Emerging | Xtrackers Emerging vs. FlexShares Morningstar Emerging | Xtrackers Emerging vs. First Trust Emerging |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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