Correlation Between Citigroup and Innovator Russell
Can any of the company-specific risk be diversified away by investing in both Citigroup and Innovator Russell 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 Innovator Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Innovator Russell 2000, you can compare the effects of market volatilities on Citigroup and Innovator Russell 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 Innovator Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Innovator Russell.
Diversification Opportunities for Citigroup and Innovator Russell
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Innovator is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Innovator Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Russell 2000 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 Innovator Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Russell 2000 has no effect on the direction of Citigroup i.e., Citigroup and Innovator Russell go up and down completely randomly.
Pair Corralation between Citigroup and Innovator Russell
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.44 times more return on investment than Innovator Russell. However, Citigroup is 2.44 times more volatile than Innovator Russell 2000. It trades about 0.24 of its potential returns per unit of risk. Innovator Russell 2000 is currently generating about 0.29 per unit of risk. If you would invest 6,245 in Citigroup on August 25, 2024 and sell it today you would earn a total of 739.00 from holding Citigroup or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Innovator Russell 2000
Performance |
| Timeline |
| Citigroup |
| Innovator Russell 2000 |
Citigroup and Innovator Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Innovator Russell
The main advantage of trading using opposite Citigroup and Innovator Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Innovator Russell 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 Innovator Russell will offset losses from the drop in Innovator Russell's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Innovator Russell vs. First Trust Cboe | Innovator Russell vs. FT Cboe Vest | Innovator Russell vs. Innovator SP 500 | Innovator Russell vs. Innovator Equity Power |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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