Correlation Between Citigroup and Qantas Airways
Can any of the company-specific risk be diversified away by investing in both Citigroup and Qantas Airways 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 Qantas Airways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Qantas Airways, you can compare the effects of market volatilities on Citigroup and Qantas Airways 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 Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Qantas Airways.
Diversification Opportunities for Citigroup and Qantas Airways
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Qantas is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Qantas Airways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of Citigroup i.e., Citigroup and Qantas Airways go up and down completely randomly.
Pair Corralation between Citigroup and Qantas Airways
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.18 times more return on investment than Qantas Airways. However, Citigroup is 1.18 times more volatile than Qantas Airways. It trades about 0.38 of its potential returns per unit of risk. Qantas Airways is currently generating about 0.12 per unit of risk. If you would invest 7,135 in Citigroup on October 27, 2024 and sell it today you would earn a total of 1,013 from holding Citigroup or generate 14.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Citigroup vs. Qantas Airways
Performance |
| Timeline |
| Citigroup |
| Qantas Airways |
Citigroup and Qantas Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Qantas Airways
The main advantage of trading using opposite Citigroup and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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