Correlation Between Citigroup and Overseas Chinese
Can any of the company-specific risk be diversified away by investing in both Citigroup and Overseas Chinese 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 Overseas Chinese into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Overseas Chinese Banking, you can compare the effects of market volatilities on Citigroup and Overseas Chinese 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 Overseas Chinese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Overseas Chinese.
Diversification Opportunities for Citigroup and Overseas Chinese
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Overseas is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Overseas Chinese Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overseas Chinese Banking 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 Overseas Chinese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overseas Chinese Banking has no effect on the direction of Citigroup i.e., Citigroup and Overseas Chinese go up and down completely randomly.
Pair Corralation between Citigroup and Overseas Chinese
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.36 times more return on investment than Overseas Chinese. However, Citigroup is 1.36 times more volatile than Overseas Chinese Banking. It trades about 0.07 of its potential returns per unit of risk. Overseas Chinese Banking is currently generating about 0.07 per unit of risk. If you would invest 4,769 in Citigroup on October 21, 2024 and sell it today you would earn a total of 3,230 from holding Citigroup or generate 67.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Overseas Chinese Banking
Performance |
| Timeline |
| Citigroup |
| Overseas Chinese Banking |
Citigroup and Overseas Chinese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Overseas Chinese
The main advantage of trading using opposite Citigroup and Overseas Chinese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Overseas Chinese 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 Overseas Chinese will offset losses from the drop in Overseas Chinese's long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
| Overseas Chinese vs. Swedbank AB | Overseas Chinese vs. KBC Groep NV | Overseas Chinese vs. Nordea Bank Abp | Overseas Chinese vs. DBS Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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