Correlation Between Citigroup and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Citigroup and Treasury Wine 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 Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Treasury Wine Estates, you can compare the effects of market volatilities on Citigroup and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Treasury Wine.
Diversification Opportunities for Citigroup and Treasury Wine
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Treasury is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Citigroup i.e., Citigroup and Treasury Wine go up and down completely randomly.
Pair Corralation between Citigroup and Treasury Wine
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.91 times more return on investment than Treasury Wine. However, Citigroup is 1.1 times less risky than Treasury Wine. It trades about 0.07 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.02 per unit of risk. If you would invest 4,206 in Citigroup on August 24, 2024 and sell it today you would earn a total of 2,778 from holding Citigroup or generate 66.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Citigroup vs. Treasury Wine Estates
Performance |
| Timeline |
| Citigroup |
| Treasury Wine Estates |
Citigroup and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Treasury Wine
The main advantage of trading using opposite Citigroup and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Treasury Wine vs. Diageo PLC ADR | Treasury Wine vs. Pernod Ricard SA | Treasury Wine vs. Remy Cointreau SA | Treasury Wine vs. MGP Ingredients |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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