Correlation Between Citigroup and TelstraLimited
Can any of the company-specific risk be diversified away by investing in both Citigroup and TelstraLimited 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 TelstraLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Telstra Limited, you can compare the effects of market volatilities on Citigroup and TelstraLimited 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 TelstraLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and TelstraLimited.
Diversification Opportunities for Citigroup and TelstraLimited
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and TelstraLimited is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Telstra Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telstra Limited 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 TelstraLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telstra Limited has no effect on the direction of Citigroup i.e., Citigroup and TelstraLimited go up and down completely randomly.
Pair Corralation between Citigroup and TelstraLimited
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.84 times more return on investment than TelstraLimited. However, Citigroup is 1.19 times less risky than TelstraLimited. It trades about 0.24 of its potential returns per unit of risk. Telstra Limited is currently generating about 0.0 per unit of risk. If you would invest 6,245 in Citigroup on August 25, 2024 and sell it today you would earn a total of 739.00 from holding Citigroup or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Telstra Limited
Performance |
| Timeline |
| Citigroup |
| Telstra Limited |
Citigroup and TelstraLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and TelstraLimited
The main advantage of trading using opposite Citigroup and TelstraLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, TelstraLimited 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 TelstraLimited will offset losses from the drop in TelstraLimited's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Royal Bank of | Citigroup vs. JPMorgan Chase Co | Citigroup vs. Nu Holdings |
| TelstraLimited vs. Proximus NV ADR | TelstraLimited vs. Singapore Telecommunications Limited | TelstraLimited vs. MTN Group Ltd | TelstraLimited vs. Tele2 AB |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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