Correlation Between Citigroup and Long/short Portfolio
Can any of the company-specific risk be diversified away by investing in both Citigroup and Long/short Portfolio 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 Long/short Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Longshort Portfolio Longshort, you can compare the effects of market volatilities on Citigroup and Long/short Portfolio 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 Long/short Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Long/short Portfolio.
Diversification Opportunities for Citigroup and Long/short Portfolio
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Long/short is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Longshort Portfolio Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long/short Portfolio 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 Long/short Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long/short Portfolio has no effect on the direction of Citigroup i.e., Citigroup and Long/short Portfolio go up and down completely randomly.
Pair Corralation between Citigroup and Long/short Portfolio
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.99 times more return on investment than Long/short Portfolio. However, Citigroup is 3.99 times more volatile than Longshort Portfolio Longshort. It trades about 0.26 of its potential returns per unit of risk. Longshort Portfolio Longshort is currently generating about 0.3 per unit of risk. If you would invest 6,361 in Citigroup on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Citigroup or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Longshort Portfolio Longshort
Performance |
| Timeline |
| Citigroup |
| Long/short Portfolio |
Citigroup and Long/short Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Long/short Portfolio
The main advantage of trading using opposite Citigroup and Long/short Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Long/short Portfolio 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 Long/short Portfolio will offset losses from the drop in Long/short Portfolio's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Long/short Portfolio vs. International Portfolio International | Long/short Portfolio vs. Small Cap Equity | Long/short Portfolio vs. Large Cap E | Long/short Portfolio vs. Matthews Pacific Tiger |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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