Correlation Between Citigroup and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Citigroup and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and SPDR SP Kensho, you can compare the effects of market volatilities on Citigroup and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and SPDR SP.
Diversification Opportunities for Citigroup and SPDR SP
Almost no diversification
The 3 months correlation between Citigroup and SPDR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SPDR SP Kensho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Kensho 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Kensho has no effect on the direction of Citigroup i.e., Citigroup and SPDR SP go up and down completely randomly.
Pair Corralation between Citigroup and SPDR SP
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.51 times more return on investment than SPDR SP. However, Citigroup is 1.51 times more volatile than SPDR SP Kensho. It trades about 0.07 of its potential returns per unit of risk. SPDR SP Kensho is currently generating about 0.09 per unit of risk. If you would invest 4,145 in Citigroup on August 27, 2024 and sell it today you would earn a total of 2,839 from holding Citigroup or generate 68.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. SPDR SP Kensho
Performance |
| Timeline |
| Citigroup |
| SPDR SP Kensho |
Citigroup and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and SPDR SP
The main advantage of trading using opposite Citigroup and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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