Correlation Between Citigroup and Aberdeen China
Can any of the company-specific risk be diversified away by investing in both Citigroup and Aberdeen China 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 Aberdeen China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Aberdeen China Oppty, you can compare the effects of market volatilities on Citigroup and Aberdeen China 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 Aberdeen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Aberdeen China.
Diversification Opportunities for Citigroup and Aberdeen China
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Aberdeen is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aberdeen China Oppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen China Oppty 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 Aberdeen China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen China Oppty has no effect on the direction of Citigroup i.e., Citigroup and Aberdeen China go up and down completely randomly.
Pair Corralation between Citigroup and Aberdeen China
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.06 times more return on investment than Aberdeen China. However, Citigroup is 1.06 times more volatile than Aberdeen China Oppty. It trades about 0.07 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about 0.04 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 | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Citigroup vs. Aberdeen China Oppty
Performance |
| Timeline |
| Citigroup |
| Aberdeen China Oppty |
Citigroup and Aberdeen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Aberdeen China
The main advantage of trading using opposite Citigroup and Aberdeen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Aberdeen China 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 Aberdeen China will offset losses from the drop in Aberdeen China's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Aberdeen China vs. Aberdeen Emerging Markets | Aberdeen China vs. Aberdeen Emerging Markets | Aberdeen China vs. Aberdeen Emerging Markets | Aberdeen China vs. Aberdeen Gbl Eq |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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