Correlation Between Citigroup and Investec
Can any of the company-specific risk be diversified away by investing in both Citigroup and Investec 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 Investec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Investec, you can compare the effects of market volatilities on Citigroup and Investec 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 Investec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Investec.
Diversification Opportunities for Citigroup and Investec
Poor diversification
The 3 months correlation between Citigroup and Investec is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Investec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec 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 Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec has no effect on the direction of Citigroup i.e., Citigroup and Investec go up and down completely randomly.
Pair Corralation between Citigroup and Investec
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.45 times more return on investment than Investec. However, Citigroup is 1.45 times more volatile than Investec. It trades about 0.25 of its potential returns per unit of risk. Investec is currently generating about -0.15 per unit of risk. If you would invest 6,360 in Citigroup on August 28, 2024 and sell it today you would earn a total of 715.00 from holding Citigroup or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Investec
Performance |
| Timeline |
| Citigroup |
| Investec |
Citigroup and Investec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Investec
The main advantage of trading using opposite Citigroup and Investec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Investec 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 Investec will offset losses from the drop in Investec's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |