Correlation Between Citigroup and AdvisorShares STAR
Can any of the company-specific risk be diversified away by investing in both Citigroup and AdvisorShares STAR 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 AdvisorShares STAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and AdvisorShares STAR Global, you can compare the effects of market volatilities on Citigroup and AdvisorShares STAR 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 AdvisorShares STAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and AdvisorShares STAR.
Diversification Opportunities for Citigroup and AdvisorShares STAR
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and AdvisorShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AdvisorShares STAR Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares STAR Global 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 AdvisorShares STAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares STAR Global has no effect on the direction of Citigroup i.e., Citigroup and AdvisorShares STAR go up and down completely randomly.
Pair Corralation between Citigroup and AdvisorShares STAR
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.58 times more return on investment than AdvisorShares STAR. However, Citigroup is 2.58 times more volatile than AdvisorShares STAR Global. It trades about 0.08 of its potential returns per unit of risk. AdvisorShares STAR Global is currently generating about 0.09 per unit of risk. If you would invest 4,558 in Citigroup on September 2, 2024 and sell it today you would earn a total of 2,529 from holding Citigroup or generate 55.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. AdvisorShares STAR Global
Performance |
| Timeline |
| Citigroup |
| AdvisorShares STAR Global |
Citigroup and AdvisorShares STAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and AdvisorShares STAR
The main advantage of trading using opposite Citigroup and AdvisorShares STAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, AdvisorShares STAR 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 AdvisorShares STAR will offset losses from the drop in AdvisorShares STAR's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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