Correlation Between Citigroup and TCW ETF
Can any of the company-specific risk be diversified away by investing in both Citigroup and TCW ETF 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 TCW ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and TCW ETF Trust, you can compare the effects of market volatilities on Citigroup and TCW ETF 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 TCW ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and TCW ETF.
Diversification Opportunities for Citigroup and TCW ETF
Very poor diversification
The 3 months correlation between Citigroup and TCW is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and TCW ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCW ETF Trust 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 TCW ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCW ETF Trust has no effect on the direction of Citigroup i.e., Citigroup and TCW ETF go up and down completely randomly.
Pair Corralation between Citigroup and TCW ETF
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.1 times less return on investment than TCW ETF. In addition to that, Citigroup is 2.07 times more volatile than TCW ETF Trust. It trades about 0.07 of its total potential returns per unit of risk. TCW ETF Trust is currently generating about 0.17 per unit of volatility. If you would invest 3,231 in TCW ETF Trust on August 30, 2024 and sell it today you would earn a total of 657.00 from holding TCW ETF Trust or generate 20.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 29.09% |
| Values | Daily Returns |
Citigroup vs. TCW ETF Trust
Performance |
| Timeline |
| Citigroup |
| TCW ETF Trust |
Citigroup and TCW ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and TCW ETF
The main advantage of trading using opposite Citigroup and TCW ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, TCW ETF 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 TCW ETF will offset losses from the drop in TCW ETF's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| TCW ETF vs. Freedom Day Dividend | TCW ETF vs. Franklin Templeton ETF | TCW ETF vs. iShares MSCI China | TCW ETF vs. Tidal Trust II |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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