Correlation Between Citigroup and Freedom Holding
Can any of the company-specific risk be diversified away by investing in both Citigroup and Freedom Holding 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 Freedom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Freedom Holding Corp, you can compare the effects of market volatilities on Citigroup and Freedom Holding 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 Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Freedom Holding.
Diversification Opportunities for Citigroup and Freedom Holding
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Freedom is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp 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 Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Citigroup i.e., Citigroup and Freedom Holding go up and down completely randomly.
Pair Corralation between Citigroup and Freedom Holding
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.02 times more return on investment than Freedom Holding. However, Citigroup is 1.02 times more volatile than Freedom Holding Corp. It trades about 0.23 of its potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.14 per unit of risk. If you would invest 6,360 in Citigroup on August 27, 2024 and sell it today you would earn a total of 624.00 from holding Citigroup or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Freedom Holding Corp
Performance |
| Timeline |
| Citigroup |
| Freedom Holding Corp |
Citigroup and Freedom Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Freedom Holding
The main advantage of trading using opposite Citigroup and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Freedom Holding 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 Freedom Holding will offset losses from the drop in Freedom Holding's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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