Correlation Between Citigroup and New Economy
Can any of the company-specific risk be diversified away by investing in both Citigroup and New Economy 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 New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and New Economy Fund, you can compare the effects of market volatilities on Citigroup and New Economy 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 New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and New Economy.
Diversification Opportunities for Citigroup and New Economy
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and NEW is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy 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 New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of Citigroup i.e., Citigroup and New Economy go up and down completely randomly.
Pair Corralation between Citigroup and New Economy
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.4 times more return on investment than New Economy. However, Citigroup is 1.4 times more volatile than New Economy Fund. It trades about 0.16 of its potential returns per unit of risk. New Economy Fund is currently generating about 0.03 per unit of risk. If you would invest 6,092 in Citigroup on November 2, 2024 and sell it today you would earn a total of 2,094 from holding Citigroup or generate 34.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. New Economy Fund
Performance |
| Timeline |
| Citigroup |
| New Economy Fund |
Citigroup and New Economy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and New Economy
The main advantage of trading using opposite Citigroup and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.| Citigroup vs. Royal Bank of | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Canadian Imperial Bank |
| New Economy vs. Ab Bond Inflation | New Economy vs. Ab Bond Inflation | New Economy vs. Credit Suisse Multialternative | New Economy vs. Ab Bond Inflation |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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