Correlation Between Citigroup and EchoStar
Can any of the company-specific risk be diversified away by investing in both Citigroup and EchoStar 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 EchoStar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and EchoStar, you can compare the effects of market volatilities on Citigroup and EchoStar 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 EchoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and EchoStar.
Diversification Opportunities for Citigroup and EchoStar
Average diversification
The 3 months correlation between Citigroup and EchoStar is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and EchoStar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EchoStar 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 EchoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EchoStar has no effect on the direction of Citigroup i.e., Citigroup and EchoStar go up and down completely randomly.
Pair Corralation between Citigroup and EchoStar
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.45 times more return on investment than EchoStar. However, Citigroup is 2.24 times less risky than EchoStar. It trades about 0.25 of its potential returns per unit of risk. EchoStar is currently generating about -0.01 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. EchoStar
Performance |
| Timeline |
| Citigroup |
| EchoStar |
Citigroup and EchoStar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and EchoStar
The main advantage of trading using opposite Citigroup and EchoStar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, EchoStar 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 EchoStar will offset losses from the drop in EchoStar's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| EchoStar vs. ADTRAN Inc | EchoStar vs. Mynaric AG ADR | EchoStar vs. KVH Industries | EchoStar vs. Telesat Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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