Correlation Between Citigroup and Splash Beverage
Can any of the company-specific risk be diversified away by investing in both Citigroup and Splash Beverage 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 Splash Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Splash Beverage Group, you can compare the effects of market volatilities on Citigroup and Splash Beverage 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 Splash Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Splash Beverage.
Diversification Opportunities for Citigroup and Splash Beverage
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Splash is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Splash Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Splash Beverage Group 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 Splash Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Splash Beverage Group has no effect on the direction of Citigroup i.e., Citigroup and Splash Beverage go up and down completely randomly.
Pair Corralation between Citigroup and Splash Beverage
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.39 times more return on investment than Splash Beverage. However, Citigroup is 2.56 times less risky than Splash Beverage. It trades about 0.21 of its potential returns per unit of risk. Splash Beverage Group is currently generating about 0.02 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Splash Beverage Group
Performance |
| Timeline |
| Citigroup |
| Splash Beverage Group |
Citigroup and Splash Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Splash Beverage
The main advantage of trading using opposite Citigroup and Splash Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Splash Beverage 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 Splash Beverage will offset losses from the drop in Splash Beverage's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Splash Beverage vs. Iconic Brands | Splash Beverage vs. Eastside Distilling | Splash Beverage vs. Andrew Peller Limited | Splash Beverage vs. Duckhorn Portfolio |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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