Correlation Between Citigroup and Science Technology
Can any of the company-specific risk be diversified away by investing in both Citigroup and Science Technology 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 Science Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Science Technology Fund, you can compare the effects of market volatilities on Citigroup and Science Technology 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 Science Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Science Technology.
Diversification Opportunities for Citigroup and Science Technology
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and Science is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Science Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Technology 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 Science Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Technology has no effect on the direction of Citigroup i.e., Citigroup and Science Technology go up and down completely randomly.
Pair Corralation between Citigroup and Science Technology
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.07 times more return on investment than Science Technology. However, Citigroup is 1.07 times more volatile than Science Technology Fund. It trades about 0.45 of its potential returns per unit of risk. Science Technology Fund is currently generating about 0.09 per unit of risk. If you would invest 6,994 in Citigroup on November 2, 2024 and sell it today you would earn a total of 1,226 from holding Citigroup or generate 17.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Science Technology Fund
Performance |
| Timeline |
| Citigroup |
| Science Technology |
Citigroup and Science Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Science Technology
The main advantage of trading using opposite Citigroup and Science Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Science Technology 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 Science Technology will offset losses from the drop in Science Technology's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Science Technology vs. Aggressive Growth Fund | Science Technology vs. Sp 500 Index | Science Technology vs. Nasdaq 100 Index Fund | Science Technology vs. International Fund International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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