Correlation Between Citigroup and Vanguard California
Can any of the company-specific risk be diversified away by investing in both Citigroup and Vanguard California 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 California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Vanguard California Long Term, you can compare the effects of market volatilities on Citigroup and Vanguard California 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 California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Vanguard California.
Diversification Opportunities for Citigroup and Vanguard California
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and VANGUARD is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Vanguard California Long Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard California 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 California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard California has no effect on the direction of Citigroup i.e., Citigroup and Vanguard California go up and down completely randomly.
Pair Corralation between Citigroup and Vanguard California
Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Vanguard California. In addition to that, Citigroup is 7.02 times more volatile than Vanguard California Long Term. It trades about -0.02 of its total potential returns per unit of risk. Vanguard California Long Term is currently generating about 0.13 per unit of volatility. If you would invest 1,139 in Vanguard California Long Term on November 27, 2024 and sell it today you would earn a total of 7.00 from holding Vanguard California Long Term or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Vanguard California Long Term
Performance |
| Timeline |
| Citigroup |
| Vanguard California |
Citigroup and Vanguard California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Vanguard California
The main advantage of trading using opposite Citigroup and Vanguard California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Vanguard California 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 California will offset losses from the drop in Vanguard California's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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