Correlation Between Citigroup and IACInterActiveCorp
Can any of the company-specific risk be diversified away by investing in both Citigroup and IACInterActiveCorp 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 IACInterActiveCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and IACInterActiveCorp, you can compare the effects of market volatilities on Citigroup and IACInterActiveCorp 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 IACInterActiveCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and IACInterActiveCorp.
Diversification Opportunities for Citigroup and IACInterActiveCorp
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and IACInterActiveCorp is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and IACInterActiveCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IACInterActiveCorp 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 IACInterActiveCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IACInterActiveCorp has no effect on the direction of Citigroup i.e., Citigroup and IACInterActiveCorp go up and down completely randomly.
Pair Corralation between Citigroup and IACInterActiveCorp
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.73 times more return on investment than IACInterActiveCorp. However, Citigroup is 1.37 times less risky than IACInterActiveCorp. It trades about 0.11 of its potential returns per unit of risk. IACInterActiveCorp is currently generating about 0.04 per unit of risk. If you would invest 4,553 in Citigroup on August 27, 2024 and sell it today you would earn a total of 2,431 from holding Citigroup or generate 53.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Citigroup vs. IACInterActiveCorp
Performance |
| Timeline |
| Citigroup |
| IACInterActiveCorp |
Citigroup and IACInterActiveCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and IACInterActiveCorp
The main advantage of trading using opposite Citigroup and IACInterActiveCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, IACInterActiveCorp 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 IACInterActiveCorp will offset losses from the drop in IACInterActiveCorp's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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