Correlation Between Citigroup and Iterum Therapeutics
Can any of the company-specific risk be diversified away by investing in both Citigroup and Iterum Therapeutics 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 Iterum Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Iterum Therapeutics PLC, you can compare the effects of market volatilities on Citigroup and Iterum Therapeutics 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 Iterum Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Iterum Therapeutics.
Diversification Opportunities for Citigroup and Iterum Therapeutics
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Iterum is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Iterum Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iterum Therapeutics 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 Iterum Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iterum Therapeutics PLC has no effect on the direction of Citigroup i.e., Citigroup and Iterum Therapeutics go up and down completely randomly.
Pair Corralation between Citigroup and Iterum Therapeutics
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.24 times less return on investment than Iterum Therapeutics. But when comparing it to its historical volatility, Citigroup is 4.02 times less risky than Iterum Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Iterum Therapeutics PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 131.00 in Iterum Therapeutics PLC on August 27, 2024 and sell it today you would earn a total of 50.00 from holding Iterum Therapeutics PLC or generate 38.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Iterum Therapeutics PLC
Performance |
| Timeline |
| Citigroup |
| Iterum Therapeutics PLC |
Citigroup and Iterum Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Iterum Therapeutics
The main advantage of trading using opposite Citigroup and Iterum Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Iterum Therapeutics 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 Iterum Therapeutics will offset losses from the drop in Iterum Therapeutics' long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| Iterum Therapeutics vs. Adial Pharmaceuticals | Iterum Therapeutics vs. Tonix Pharmaceuticals Holding | Iterum Therapeutics vs. Fortress Biotech | Iterum Therapeutics vs. Eyenovia |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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