Correlation Between Citigroup and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both Citigroup and VanEck ETF 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 VanEck ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and VanEck ETF Trust, you can compare the effects of market volatilities on Citigroup and VanEck ETF 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 VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and VanEck ETF.
Diversification Opportunities for Citigroup and VanEck ETF
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and VanEck is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF 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 VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of Citigroup i.e., Citigroup and VanEck ETF go up and down completely randomly.
Pair Corralation between Citigroup and VanEck ETF
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.87 times more return on investment than VanEck ETF. However, Citigroup is 2.87 times more volatile than VanEck ETF Trust. It trades about 0.27 of its potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.3 per unit of risk. If you would invest 6,315 in Citigroup on September 2, 2024 and sell it today you would earn a total of 772.00 from holding Citigroup or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. VanEck ETF Trust
Performance |
| Timeline |
| Citigroup |
| VanEck ETF Trust |
Citigroup and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and VanEck ETF
The main advantage of trading using opposite Citigroup and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, VanEck ETF 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 VanEck ETF will offset losses from the drop in VanEck ETF's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| VanEck ETF vs. VanEck Morningstar International | VanEck ETF vs. VanEck Vectors ETF | VanEck ETF vs. BlackRock Carbon Transition | VanEck ETF vs. VanEck Morningstar Wide |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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