Correlation Between Citigroup and Liberty All
Can any of the company-specific risk be diversified away by investing in both Citigroup and Liberty All 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 Liberty All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Liberty All Star, you can compare the effects of market volatilities on Citigroup and Liberty All 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 Liberty All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Liberty All.
Diversification Opportunities for Citigroup and Liberty All
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Liberty is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Liberty All Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty All Star 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 Liberty All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty All Star has no effect on the direction of Citigroup i.e., Citigroup and Liberty All go up and down completely randomly.
Pair Corralation between Citigroup and Liberty All
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.66 times more return on investment than Liberty All. However, Citigroup is 1.66 times more volatile than Liberty All Star. It trades about 0.09 of its potential returns per unit of risk. Liberty All Star is currently generating about 0.1 per unit of risk. If you would invest 4,350 in Citigroup on August 27, 2024 and sell it today you would earn a total of 2,634 from holding Citigroup or generate 60.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Liberty All Star
Performance |
| Timeline |
| Citigroup |
| Liberty All Star |
Citigroup and Liberty All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Liberty All
The main advantage of trading using opposite Citigroup and Liberty All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Liberty All 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 Liberty All will offset losses from the drop in Liberty All's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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