Correlation Between Citigroup and IShares TIPS
Can any of the company-specific risk be diversified away by investing in both Citigroup and IShares TIPS 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 IShares TIPS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and iShares TIPS Bond, you can compare the effects of market volatilities on Citigroup and IShares TIPS 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 IShares TIPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and IShares TIPS.
Diversification Opportunities for Citigroup and IShares TIPS
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and IShares is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and iShares TIPS Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares TIPS Bond 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 IShares TIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares TIPS Bond has no effect on the direction of Citigroup i.e., Citigroup and IShares TIPS go up and down completely randomly.
Pair Corralation between Citigroup and IShares TIPS
Taking into account the 90-day investment horizon Citigroup is expected to generate 7.53 times more return on investment than IShares TIPS. However, Citigroup is 7.53 times more volatile than iShares TIPS Bond. It trades about 0.15 of its potential returns per unit of risk. iShares TIPS Bond is currently generating about -0.14 per unit of risk. If you would invest 6,205 in Citigroup on August 30, 2024 and sell it today you would earn a total of 811.00 from holding Citigroup or generate 13.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. iShares TIPS Bond
Performance |
| Timeline |
| Citigroup |
| iShares TIPS Bond |
Citigroup and IShares TIPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and IShares TIPS
The main advantage of trading using opposite Citigroup and IShares TIPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, IShares TIPS 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 IShares TIPS will offset losses from the drop in IShares TIPS's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| IShares TIPS vs. iShares iBoxx Investment | IShares TIPS vs. iShares 1 3 Year | IShares TIPS vs. iShares 7 10 Year | IShares TIPS vs. iShares Core Aggregate |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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