Correlation Between Citigroup and High Yield
Can any of the company-specific risk be diversified away by investing in both Citigroup and High Yield 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 High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and High Yield Fund, you can compare the effects of market volatilities on Citigroup and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and High Yield.
Diversification Opportunities for Citigroup and High Yield
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and High is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Citigroup i.e., Citigroup and High Yield go up and down completely randomly.
Pair Corralation between Citigroup and High Yield
Taking into account the 90-day investment horizon Citigroup is expected to generate 10.16 times more return on investment than High Yield. However, Citigroup is 10.16 times more volatile than High Yield Fund. It trades about 0.45 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.18 per unit of risk. If you would invest 6,994 in Citigroup on November 2, 2024 and sell it today you would earn a total of 1,192 from holding Citigroup or generate 17.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. High Yield Fund
Performance |
| Timeline |
| Citigroup |
| High Yield Fund |
Citigroup and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and High Yield
The main advantage of trading using opposite Citigroup and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Citigroup vs. Royal Bank of | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Canadian Imperial Bank |
| High Yield vs. Pimco Rae Worldwide | High Yield vs. Pimco Rae Worldwide | High Yield vs. Pimco Rae Worldwide | High Yield vs. Pimco Rae Worldwide |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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