Correlation Between Citigroup and Betashares Australian
Can any of the company-specific risk be diversified away by investing in both Citigroup and Betashares Australian 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 Betashares Australian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Betashares Australian Momentum, you can compare the effects of market volatilities on Citigroup and Betashares Australian 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 Betashares Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Betashares Australian.
Diversification Opportunities for Citigroup and Betashares Australian
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Betashares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Betashares Australian Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Australian 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 Betashares Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Australian has no effect on the direction of Citigroup i.e., Citigroup and Betashares Australian go up and down completely randomly.
Pair Corralation between Citigroup and Betashares Australian
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.57 times more return on investment than Betashares Australian. However, Citigroup is 2.57 times more volatile than Betashares Australian Momentum. It trades about 0.2 of its potential returns per unit of risk. Betashares Australian Momentum is currently generating about 0.31 per unit of risk. If you would invest 6,412 in Citigroup on August 30, 2024 and sell it today you would earn a total of 604.00 from holding Citigroup or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Betashares Australian Momentum
Performance |
| Timeline |
| Citigroup |
| Betashares Australian |
Citigroup and Betashares Australian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Betashares Australian
The main advantage of trading using opposite Citigroup and Betashares Australian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Betashares Australian 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 Betashares Australian will offset losses from the drop in Betashares Australian's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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