Correlation Between Citigroup and IShares Asia
Can any of the company-specific risk be diversified away by investing in both Citigroup and IShares Asia 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 IShares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and iShares Asia Pacific, you can compare the effects of market volatilities on Citigroup and IShares Asia 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 IShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and IShares Asia.
Diversification Opportunities for Citigroup and IShares Asia
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and IShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and iShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia Pacific 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 IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia Pacific has no effect on the direction of Citigroup i.e., Citigroup and IShares Asia go up and down completely randomly.
Pair Corralation between Citigroup and IShares Asia
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.74 times more return on investment than IShares Asia. However, Citigroup is 2.74 times more volatile than iShares Asia Pacific. It trades about 0.23 of its potential returns per unit of risk. iShares Asia Pacific is currently generating about 0.15 per unit of risk. If you would invest 6,255 in Citigroup on August 24, 2024 and sell it today you would earn a total of 729.00 from holding Citigroup or generate 11.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. iShares Asia Pacific
Performance |
| Timeline |
| Citigroup |
| iShares Asia Pacific |
Citigroup and IShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and IShares Asia
The main advantage of trading using opposite Citigroup and IShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, IShares Asia 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 IShares Asia will offset losses from the drop in IShares Asia's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| IShares Asia vs. iShares III Public | IShares Asia vs. iShares Core MSCI | IShares Asia vs. iShares France Govt | IShares Asia vs. iShares Edge MSCI |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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