Correlation Between Citigroup and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Citigroup and IShares Trust 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 Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and iShares Trust, you can compare the effects of market volatilities on Citigroup and IShares Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and IShares Trust.
Diversification Opportunities for Citigroup and IShares Trust
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and IShares is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Citigroup i.e., Citigroup and IShares Trust go up and down completely randomly.
Pair Corralation between Citigroup and IShares Trust
Taking into account the 90-day investment horizon Citigroup is expected to generate 10.46 times more return on investment than IShares Trust. However, Citigroup is 10.46 times more volatile than iShares Trust. It trades about 0.42 of its potential returns per unit of risk. iShares Trust is currently generating about 0.24 per unit of risk. If you would invest 6,919 in Citigroup on October 21, 2024 and sell it today you would earn a total of 1,080 from holding Citigroup or generate 15.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. iShares Trust
Performance |
| Timeline |
| Citigroup |
| iShares Trust |
Citigroup and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and IShares Trust
The main advantage of trading using opposite Citigroup and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, IShares Trust 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 Trust will offset losses from the drop in IShares Trust's long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
| IShares Trust vs. Vanguard Short Term Inflation Protected | IShares Trust vs. iShares TIPS Bond | IShares Trust vs. Invesco PureBeta 0 5 | IShares Trust vs. Goldman Sachs Access |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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