Correlation Between Citigroup and Futu Holdings
Can any of the company-specific risk be diversified away by investing in both Citigroup and Futu Holdings 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 Futu Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Futu Holdings, you can compare the effects of market volatilities on Citigroup and Futu Holdings 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 Futu Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Futu Holdings.
Diversification Opportunities for Citigroup and Futu Holdings
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Futu is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Futu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futu Holdings 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 Futu Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futu Holdings has no effect on the direction of Citigroup i.e., Citigroup and Futu Holdings go up and down completely randomly.
Pair Corralation between Citigroup and Futu Holdings
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.39 times more return on investment than Futu Holdings. However, Citigroup is 2.54 times less risky than Futu Holdings. It trades about 0.21 of its potential returns per unit of risk. Futu Holdings is currently generating about -0.07 per unit of risk. If you would invest 6,393 in Citigroup on August 31, 2024 and sell it today you would earn a total of 623.00 from holding Citigroup or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Futu Holdings
Performance |
| Timeline |
| Citigroup |
| Futu Holdings |
Citigroup and Futu Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Futu Holdings
The main advantage of trading using opposite Citigroup and Futu Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Futu Holdings 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 Futu Holdings will offset losses from the drop in Futu Holdings' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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