Correlation Between Citigroup and 3I Group
Can any of the company-specific risk be diversified away by investing in both Citigroup and 3I Group 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 3I Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and 3I Group PLC, you can compare the effects of market volatilities on Citigroup and 3I Group 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 3I Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 3I Group.
Diversification Opportunities for Citigroup and 3I Group
Very poor diversification
The 3 months correlation between Citigroup and III is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and 3I Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3I Group PLC 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 3I Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3I Group PLC has no effect on the direction of Citigroup i.e., Citigroup and 3I Group go up and down completely randomly.
Pair Corralation between Citigroup and 3I Group
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.28 times more return on investment than 3I Group. However, Citigroup is 1.28 times more volatile than 3I Group PLC. It trades about 0.07 of its potential returns per unit of risk. 3I Group PLC is currently generating about 0.08 per unit of risk. If you would invest 6,013 in Citigroup on September 24, 2024 and sell it today you would earn a total of 906.00 from holding Citigroup or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
Citigroup vs. 3I Group PLC
Performance |
| Timeline |
| Citigroup |
| 3I Group PLC |
Citigroup and 3I Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and 3I Group
The main advantage of trading using opposite Citigroup and 3I Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 3I Group 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 3I Group will offset losses from the drop in 3I Group's long position.The idea behind Citigroup and 3I Group PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 3I Group vs. Darden Restaurants | 3I Group vs. New Residential Investment | 3I Group vs. Kinnevik Investment AB | 3I Group vs. Scandinavian Tobacco Group |
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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