Correlation Between Citigroup and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Citigroup and Stone Ridge 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 Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Stone Ridge 2063, you can compare the effects of market volatilities on Citigroup and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Stone Ridge.
Diversification Opportunities for Citigroup and Stone Ridge
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Stone is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Stone Ridge 2063 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2063 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge 2063 has no effect on the direction of Citigroup i.e., Citigroup and Stone Ridge go up and down completely randomly.
Pair Corralation between Citigroup and Stone Ridge
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.33 times more return on investment than Stone Ridge. However, Citigroup is 3.33 times more volatile than Stone Ridge 2063. It trades about 0.23 of its potential returns per unit of risk. Stone Ridge 2063 is currently generating about -0.12 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Stone Ridge 2063
Performance |
| Timeline |
| Citigroup |
| Stone Ridge 2063 |
Citigroup and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Stone Ridge
The main advantage of trading using opposite Citigroup and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Stone Ridge vs. Simplify Volatility Premium | Stone Ridge vs. Sprott Focus Trust | Stone Ridge vs. iShares Trust | Stone Ridge vs. iShares Trust |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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