Correlation Between Citigroup and Dow 2x
Can any of the company-specific risk be diversified away by investing in both Citigroup and Dow 2x 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 Dow 2x into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Dow 2x Strategy, you can compare the effects of market volatilities on Citigroup and Dow 2x 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 Dow 2x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Dow 2x.
Diversification Opportunities for Citigroup and Dow 2x
Very poor diversification
The 3 months correlation between Citigroup and Dow is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Dow 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow 2x Strategy 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 Dow 2x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow 2x Strategy has no effect on the direction of Citigroup i.e., Citigroup and Dow 2x go up and down completely randomly.
Pair Corralation between Citigroup and Dow 2x
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.05 times more return on investment than Dow 2x. However, Citigroup is 1.05 times more volatile than Dow 2x Strategy. It trades about 0.25 of its potential returns per unit of risk. Dow 2x Strategy is currently generating about 0.26 per unit of risk. If you would invest 6,360 in Citigroup on August 28, 2024 and sell it today you would earn a total of 715.00 from holding Citigroup or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Dow 2x Strategy
Performance |
| Timeline |
| Citigroup |
| Dow 2x Strategy |
Citigroup and Dow 2x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Dow 2x
The main advantage of trading using opposite Citigroup and Dow 2x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Dow 2x 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 Dow 2x will offset losses from the drop in Dow 2x's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| Dow 2x vs. Sp 500 2x | Dow 2x vs. Inverse Dow 2x | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Russell 2000 2x |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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