Correlation Between Citigroup and Strategy Shares
Can any of the company-specific risk be diversified away by investing in both Citigroup and Strategy Shares 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 Strategy Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Strategy Shares Gold Hedged, you can compare the effects of market volatilities on Citigroup and Strategy Shares 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 Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Strategy Shares.
Diversification Opportunities for Citigroup and Strategy Shares
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Strategy is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Strategy Shares Gold Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares Gold 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 Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares Gold has no effect on the direction of Citigroup i.e., Citigroup and Strategy Shares go up and down completely randomly.
Pair Corralation between Citigroup and Strategy Shares
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.64 times more return on investment than Strategy Shares. However, Citigroup is 1.64 times more volatile than Strategy Shares Gold Hedged. It trades about 0.08 of its potential returns per unit of risk. Strategy Shares Gold Hedged is currently generating about 0.07 per unit of risk. If you would invest 4,558 in Citigroup on September 2, 2024 and sell it today you would earn a total of 2,529 from holding Citigroup or generate 55.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.96% |
| Values | Daily Returns |
Citigroup vs. Strategy Shares Gold Hedged
Performance |
| Timeline |
| Citigroup |
| Strategy Shares Gold |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and Strategy Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Strategy Shares
The main advantage of trading using opposite Citigroup and Strategy Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Strategy Shares 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 Strategy Shares will offset losses from the drop in Strategy Shares' 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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