Correlation Between Citigroup and Gateway Equity
Can any of the company-specific risk be diversified away by investing in both Citigroup and Gateway Equity 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 Gateway Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Gateway Equity Call, you can compare the effects of market volatilities on Citigroup and Gateway Equity 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 Gateway Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Gateway Equity.
Diversification Opportunities for Citigroup and Gateway Equity
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Gateway is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Gateway Equity Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Equity Call 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 Gateway Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Equity Call has no effect on the direction of Citigroup i.e., Citigroup and Gateway Equity go up and down completely randomly.
Pair Corralation between Citigroup and Gateway Equity
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.16 times more return on investment than Gateway Equity. However, Citigroup is 3.16 times more volatile than Gateway Equity Call. It trades about 0.07 of its potential returns per unit of risk. Gateway Equity Call is currently generating about 0.13 per unit of risk. If you would invest 6,079 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,008 from holding Citigroup or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Citigroup vs. Gateway Equity Call
Performance |
| Timeline |
| Citigroup |
| Gateway Equity Call |
Citigroup and Gateway Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Gateway Equity
The main advantage of trading using opposite Citigroup and Gateway Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Gateway Equity 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 Gateway Equity will offset losses from the drop in Gateway Equity's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Gateway Equity vs. Asg Managed Futures | Gateway Equity vs. Asg Managed Futures | Gateway Equity vs. Natixis Oakmark | Gateway Equity vs. Natixis Oakmark International |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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