Correlation Between Citigroup and IShares China
Can any of the company-specific risk be diversified away by investing in both Citigroup and IShares China 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 China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and iShares China LargeCap, you can compare the effects of market volatilities on Citigroup and IShares China 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 China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and IShares China.
Diversification Opportunities for Citigroup and IShares China
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and IShares is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and iShares China LargeCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China LargeCap 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 China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China LargeCap has no effect on the direction of Citigroup i.e., Citigroup and IShares China go up and down completely randomly.
Pair Corralation between Citigroup and IShares China
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.02 times more return on investment than IShares China. However, Citigroup is 2.02 times more volatile than iShares China LargeCap. It trades about 0.26 of its potential returns per unit of risk. iShares China LargeCap is currently generating about -0.16 per unit of risk. If you would invest 6,361 in Citigroup on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Citigroup or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Citigroup vs. iShares China LargeCap
Performance |
| Timeline |
| Citigroup |
| iShares China LargeCap |
Citigroup and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and IShares China
The main advantage of trading using opposite Citigroup and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, IShares China 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 China will offset losses from the drop in IShares China's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| IShares China vs. ETFS Morningstar Global | IShares China vs. BetaShares Geared Equity | IShares China vs. VanEck Vectors Australian | IShares China vs. SPDR SPASX 200 |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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