Correlation Between Citigroup and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Citigroup and IShares Trust 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 Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and iShares Trust, you can compare the effects of market volatilities on Citigroup and IShares Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and IShares Trust.
Diversification Opportunities for Citigroup and IShares Trust
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and IShares is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Citigroup i.e., Citigroup and IShares Trust go up and down completely randomly.
Pair Corralation between Citigroup and IShares Trust
Taking into account the 90-day investment horizon Citigroup is expected to generate 12.52 times more return on investment than IShares Trust. However, Citigroup is 12.52 times more volatile than iShares Trust. It trades about 0.12 of its potential returns per unit of risk. iShares Trust is currently generating about 0.13 per unit of risk. If you would invest 4,004 in Citigroup on September 12, 2024 and sell it today you would earn a total of 3,200 from holding Citigroup or generate 79.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 7.25% |
| Values | Daily Returns |
Citigroup vs. iShares Trust
Performance |
| Timeline |
| Citigroup |
| iShares Trust |
Citigroup and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and IShares Trust
The main advantage of trading using opposite Citigroup and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, IShares Trust 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 Trust will offset losses from the drop in IShares Trust's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| IShares Trust vs. Vanguard Total Stock | IShares Trust vs. SPDR SP 500 | IShares Trust vs. iShares Core SP | IShares Trust vs. Vanguard Total Bond |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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