Correlation Between Citigroup and Technology Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Citigroup and Technology Telecommunicatio 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 Technology Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Technology Telecommunication, you can compare the effects of market volatilities on Citigroup and Technology Telecommunicatio 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 Technology Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Technology Telecommunicatio.
Diversification Opportunities for Citigroup and Technology Telecommunicatio
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Technology is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Technology Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Telecommunicatio 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 Technology Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Telecommunicatio has no effect on the direction of Citigroup i.e., Citigroup and Technology Telecommunicatio go up and down completely randomly.
Pair Corralation between Citigroup and Technology Telecommunicatio
Taking into account the 90-day investment horizon Citigroup is expected to generate 4.07 times more return on investment than Technology Telecommunicatio. However, Citigroup is 4.07 times more volatile than Technology Telecommunication. It trades about 0.07 of its potential returns per unit of risk. Technology Telecommunication is currently generating about 0.09 per unit of risk. If you would invest 4,237 in Citigroup on September 4, 2024 and sell it today you would earn a total of 2,902 from holding Citigroup or generate 68.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Citigroup vs. Technology Telecommunication
Performance |
| Timeline |
| Citigroup |
| Technology Telecommunicatio |
Citigroup and Technology Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Technology Telecommunicatio
The main advantage of trading using opposite Citigroup and Technology Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Technology Telecommunicatio 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 Technology Telecommunicatio will offset losses from the drop in Technology Telecommunicatio's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Technology Telecommunicatio vs. Target Global Acquisition | Technology Telecommunicatio vs. Healthcare AI Acquisition |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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