Correlation Between Citigroup and CI Global
Can any of the company-specific risk be diversified away by investing in both Citigroup and CI Global 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 CI Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and CI Global Financial, you can compare the effects of market volatilities on Citigroup and CI Global 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 CI Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and CI Global.
Diversification Opportunities for Citigroup and CI Global
Very poor diversification
The 3 months correlation between Citigroup and FSF is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CI Global Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Global Financial 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 CI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Global Financial has no effect on the direction of Citigroup i.e., Citigroup and CI Global go up and down completely randomly.
Pair Corralation between Citigroup and CI Global
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.47 times more return on investment than CI Global. However, Citigroup is 2.47 times more volatile than CI Global Financial. It trades about 0.21 of its potential returns per unit of risk. CI Global Financial is currently generating about 0.29 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. CI Global Financial
Performance |
| Timeline |
| Citigroup |
| CI Global Financial |
Citigroup and CI Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and CI Global
The main advantage of trading using opposite Citigroup and CI Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, CI Global 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 CI Global will offset losses from the drop in CI Global's long position.The idea behind Citigroup and CI Global Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CI Global vs. Brompton Global Dividend | CI Global vs. Tech Leaders Income | CI Global vs. Global Healthcare Income | CI Global vs. Brompton European Dividend |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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