Correlation Between Citigroup and Swire Pacific
Can any of the company-specific risk be diversified away by investing in both Citigroup and Swire Pacific 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 Swire Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Swire Pacific Ltd, you can compare the effects of market volatilities on Citigroup and Swire Pacific 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 Swire Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Swire Pacific.
Diversification Opportunities for Citigroup and Swire Pacific
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and Swire is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Swire Pacific Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Pacific 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 Swire Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swire Pacific has no effect on the direction of Citigroup i.e., Citigroup and Swire Pacific go up and down completely randomly.
Pair Corralation between Citigroup and Swire Pacific
Taking into account the 90-day investment horizon Citigroup is expected to generate 4.67 times less return on investment than Swire Pacific. But when comparing it to its historical volatility, Citigroup is 6.05 times less risky than Swire Pacific. It trades about 0.07 of its potential returns per unit of risk. Swire Pacific Ltd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 493.00 in Swire Pacific Ltd on September 3, 2024 and sell it today you would earn a total of 175.00 from holding Swire Pacific Ltd or generate 35.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 87.88% |
| Values | Daily Returns |
Citigroup vs. Swire Pacific Ltd
Performance |
| Timeline |
| Citigroup |
| Swire Pacific |
Citigroup and Swire Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Swire Pacific
The main advantage of trading using opposite Citigroup and Swire Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Swire Pacific 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 Swire Pacific will offset losses from the drop in Swire Pacific's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Swire Pacific vs. CITIC Limited | Swire Pacific vs. Fosun International | Swire Pacific vs. Cibl Inc | Swire Pacific vs. Jardine Matheson Holdings |
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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