Correlation Between Citigroup and Vanguard Global
Can any of the company-specific risk be diversified away by investing in both Citigroup and Vanguard Global 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 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Vanguard Global Infrastructure, you can compare the effects of market volatilities on Citigroup and Vanguard Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Vanguard Global.
Diversification Opportunities for Citigroup and Vanguard Global
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Vanguard is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Vanguard Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Infr 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global Infr has no effect on the direction of Citigroup i.e., Citigroup and Vanguard Global go up and down completely randomly.
Pair Corralation between Citigroup and Vanguard Global
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.13 times more return on investment than Vanguard Global. However, Citigroup is 2.13 times more volatile than Vanguard Global Infrastructure. It trades about 0.07 of its potential returns per unit of risk. Vanguard Global Infrastructure is currently generating about 0.05 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 2,898 from holding Citigroup or generate 70.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Citigroup vs. Vanguard Global Infrastructure
Performance |
| Timeline |
| Citigroup |
| Vanguard Global Infr |
Citigroup and Vanguard Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Vanguard Global
The main advantage of trading using opposite Citigroup and Vanguard Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Vanguard Global 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 Global will offset losses from the drop in Vanguard Global's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Vanguard Global vs. BetaShares Geared Australian | Vanguard Global vs. BetaShares Global Robotics | Vanguard Global vs. iShares China LargeCap | Vanguard Global vs. Russell Australian Government |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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