Correlation Between Citigroup and Core Bond
Can any of the company-specific risk be diversified away by investing in both Citigroup and Core Bond 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 Core Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Core Bond Fund, you can compare the effects of market volatilities on Citigroup and Core Bond 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 Core Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Core Bond.
Diversification Opportunities for Citigroup and Core Bond
Very good diversification
The 3 months correlation between Citigroup and Core is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Core Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Bond Fund 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 Core Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Bond Fund has no effect on the direction of Citigroup i.e., Citigroup and Core Bond go up and down completely randomly.
Pair Corralation between Citigroup and Core Bond
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.74 times more return on investment than Core Bond. However, Citigroup is 3.74 times more volatile than Core Bond Fund. It trades about 0.02 of its potential returns per unit of risk. Core Bond Fund is currently generating about -0.36 per unit of risk. If you would invest 7,075 in Citigroup on September 25, 2024 and sell it today you would earn a total of 25.00 from holding Citigroup or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Core Bond Fund
Performance |
| Timeline |
| Citigroup |
| Core Bond Fund |
Citigroup and Core Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Core Bond
The main advantage of trading using opposite Citigroup and Core Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Core Bond 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 Core Bond will offset losses from the drop in Core Bond's long position.The idea behind Citigroup and Core Bond Fund 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.| Core Bond vs. Regional Bank Fund | Core Bond vs. Regional Bank Fund | Core Bond vs. Multimanager Lifestyle Moderate | Core Bond vs. Multimanager Lifestyle Balanced |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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