Correlation Between Citigroup and Invesco NASDAQ
Can any of the company-specific risk be diversified away by investing in both Citigroup and Invesco NASDAQ 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 Invesco NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Invesco NASDAQ 100, you can compare the effects of market volatilities on Citigroup and Invesco NASDAQ 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 Invesco NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Invesco NASDAQ.
Diversification Opportunities for Citigroup and Invesco NASDAQ
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Invesco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Invesco NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco NASDAQ 100 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 Invesco NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco NASDAQ 100 has no effect on the direction of Citigroup i.e., Citigroup and Invesco NASDAQ go up and down completely randomly.
Pair Corralation between Citigroup and Invesco NASDAQ
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.89 times more return on investment than Invesco NASDAQ. However, Citigroup is 1.89 times more volatile than Invesco NASDAQ 100. It trades about 0.29 of its potential returns per unit of risk. Invesco NASDAQ 100 is currently generating about 0.09 per unit of risk. If you would invest 6,122 in Citigroup on August 26, 2024 and sell it today you would earn a total of 862.00 from holding Citigroup or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Invesco NASDAQ 100
Performance |
| Timeline |
| Citigroup |
| Invesco NASDAQ 100 |
Citigroup and Invesco NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Invesco NASDAQ
The main advantage of trading using opposite Citigroup and Invesco NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Invesco NASDAQ 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 Invesco NASDAQ will offset losses from the drop in Invesco NASDAQ's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Invesco NASDAQ vs. Invesco Dynamic Large | Invesco NASDAQ vs. Perella Weinberg Partners | Invesco NASDAQ vs. HUMANA INC | Invesco NASDAQ vs. Aquagold International |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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