Correlation Between Citigroup and FlexShares STOXX
Can any of the company-specific risk be diversified away by investing in both Citigroup and FlexShares STOXX 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 FlexShares STOXX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and FlexShares STOXX Global, you can compare the effects of market volatilities on Citigroup and FlexShares STOXX 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 FlexShares STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and FlexShares STOXX.
Diversification Opportunities for Citigroup and FlexShares STOXX
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and FlexShares is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and FlexShares STOXX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares STOXX Global 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 FlexShares STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares STOXX Global has no effect on the direction of Citigroup i.e., Citigroup and FlexShares STOXX go up and down completely randomly.
Pair Corralation between Citigroup and FlexShares STOXX
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.68 times more return on investment than FlexShares STOXX. However, Citigroup is 3.68 times more volatile than FlexShares STOXX Global. It trades about 0.26 of its potential returns per unit of risk. FlexShares STOXX Global is currently generating about 0.29 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 | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. FlexShares STOXX Global
Performance |
| Timeline |
| Citigroup |
| FlexShares STOXX Global |
Citigroup and FlexShares STOXX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and FlexShares STOXX
The main advantage of trading using opposite Citigroup and FlexShares STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, FlexShares STOXX 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 FlexShares STOXX will offset losses from the drop in FlexShares STOXX's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| FlexShares STOXX vs. FlexShares Quality Large | FlexShares STOXX vs. FlexShares Disciplined Duration | FlexShares STOXX vs. FlexShares Real Assets | FlexShares STOXX vs. First Trust Developed |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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