Correlation Between Citigroup and AB Disruptors
Can any of the company-specific risk be diversified away by investing in both Citigroup and AB Disruptors 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 AB Disruptors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and AB Disruptors ETF, you can compare the effects of market volatilities on Citigroup and AB Disruptors 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 AB Disruptors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and AB Disruptors.
Diversification Opportunities for Citigroup and AB Disruptors
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and FWD is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AB Disruptors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Disruptors ETF 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 AB Disruptors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Disruptors ETF has no effect on the direction of Citigroup i.e., Citigroup and AB Disruptors go up and down completely randomly.
Pair Corralation between Citigroup and AB Disruptors
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.53 times more return on investment than AB Disruptors. However, Citigroup is 1.53 times more volatile than AB Disruptors ETF. It trades about 0.23 of its potential returns per unit of risk. AB Disruptors ETF is currently generating about 0.2 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. AB Disruptors ETF
Performance |
| Timeline |
| Citigroup |
| AB Disruptors ETF |
Citigroup and AB Disruptors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and AB Disruptors
The main advantage of trading using opposite Citigroup and AB Disruptors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, AB Disruptors 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 AB Disruptors will offset losses from the drop in AB Disruptors' long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| AB Disruptors vs. The RBB Fund | AB Disruptors vs. The RBB Fund | AB Disruptors vs. Motley Fool Next | AB Disruptors vs. Motley Fool Capital |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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