Correlation Between Citigroup and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Citigroup and Singapore Airlines 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 Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Singapore Airlines, you can compare the effects of market volatilities on Citigroup and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Singapore Airlines.
Diversification Opportunities for Citigroup and Singapore Airlines
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Singapore is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of Citigroup i.e., Citigroup and Singapore Airlines go up and down completely randomly.
Pair Corralation between Citigroup and Singapore Airlines
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.11 times more return on investment than Singapore Airlines. However, Citigroup is 2.11 times more volatile than Singapore Airlines. It trades about 0.42 of its potential returns per unit of risk. Singapore Airlines is currently generating about -0.09 per unit of risk. If you would invest 6,994 in Citigroup on November 3, 2024 and sell it today you would earn a total of 1,149 from holding Citigroup or generate 16.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Singapore Airlines
Performance |
| Timeline |
| Citigroup |
| Singapore Airlines |
Citigroup and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Singapore Airlines
The main advantage of trading using opposite Citigroup and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Singapore Airlines vs. Cathay Pacific Airways | Singapore Airlines vs. Qantas Airways Ltd | Singapore Airlines vs. International Consolidated Airlines | Singapore Airlines vs. Singapore Airlines |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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