Correlation Between Citigroup and Vanguard LifeStrategy
Can any of the company-specific risk be diversified away by investing in both Citigroup and Vanguard LifeStrategy 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 Vanguard LifeStrategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Vanguard LifeStrategy 80, you can compare the effects of market volatilities on Citigroup and Vanguard LifeStrategy 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 Vanguard LifeStrategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Vanguard LifeStrategy.
Diversification Opportunities for Citigroup and Vanguard LifeStrategy
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Vanguard is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Vanguard LifeStrategy 80 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard LifeStrategy 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 Vanguard LifeStrategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard LifeStrategy has no effect on the direction of Citigroup i.e., Citigroup and Vanguard LifeStrategy go up and down completely randomly.
Pair Corralation between Citigroup and Vanguard LifeStrategy
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.9 times more return on investment than Vanguard LifeStrategy. However, Citigroup is 2.9 times more volatile than Vanguard LifeStrategy 80. It trades about 0.07 of its potential returns per unit of risk. Vanguard LifeStrategy 80 is currently generating about 0.11 per unit of risk. If you would invest 4,118 in Citigroup on August 29, 2024 and sell it today you would earn a total of 2,857 from holding Citigroup or generate 69.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.22% |
| Values | Daily Returns |
Citigroup vs. Vanguard LifeStrategy 80
Performance |
| Timeline |
| Citigroup |
| Vanguard LifeStrategy |
Citigroup and Vanguard LifeStrategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Vanguard LifeStrategy
The main advantage of trading using opposite Citigroup and Vanguard LifeStrategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Vanguard LifeStrategy 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 Vanguard LifeStrategy will offset losses from the drop in Vanguard LifeStrategy's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Vanguard LifeStrategy vs. Vanguard FTSE All World | Vanguard LifeStrategy vs. Vanguard FTSE Developed | Vanguard LifeStrategy vs. Vanguard FTSE All World | Vanguard LifeStrategy vs. Vanguard FTSE Developed |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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