Correlation Between Citigroup and Capital World
Can any of the company-specific risk be diversified away by investing in both Citigroup and Capital World 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 Capital World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Capital World Bond, you can compare the effects of market volatilities on Citigroup and Capital World 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 Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Capital World.
Diversification Opportunities for Citigroup and Capital World
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Capital is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Capital World Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Bond 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 Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Bond has no effect on the direction of Citigroup i.e., Citigroup and Capital World go up and down completely randomly.
Pair Corralation between Citigroup and Capital World
Taking into account the 90-day investment horizon Citigroup is expected to generate 4.89 times more return on investment than Capital World. However, Citigroup is 4.89 times more volatile than Capital World Bond. It trades about 0.21 of its potential returns per unit of risk. Capital World Bond is currently generating about -0.04 per unit of risk. If you would invest 6,393 in Citigroup on August 31, 2024 and sell it today you would earn a total of 623.00 from holding Citigroup or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Capital World Bond
Performance |
| Timeline |
| Citigroup |
| Capital World Bond |
Citigroup and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Capital World
The main advantage of trading using opposite Citigroup and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Capital World vs. Goehring Rozencwajg Resources | Capital World vs. Firsthand Alternative Energy | Capital World vs. Oil Gas Ultrasector | Capital World vs. Fidelity Advisor Energy |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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