Correlation Between Citigroup and Vanguard Health
Can any of the company-specific risk be diversified away by investing in both Citigroup and Vanguard Health 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 Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Vanguard Health Care, you can compare the effects of market volatilities on Citigroup and Vanguard Health 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 Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Vanguard Health.
Diversification Opportunities for Citigroup and Vanguard Health
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Vanguard is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Vanguard Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Health Care 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 Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Health Care has no effect on the direction of Citigroup i.e., Citigroup and Vanguard Health go up and down completely randomly.
Pair Corralation between Citigroup and Vanguard Health
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.3 times more return on investment than Vanguard Health. However, Citigroup is 2.3 times more volatile than Vanguard Health Care. It trades about 0.07 of its potential returns per unit of risk. Vanguard Health Care is currently generating about 0.04 per unit of risk. If you would invest 4,381 in Citigroup on August 31, 2024 and sell it today you would earn a total of 2,706 from holding Citigroup or generate 61.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Citigroup vs. Vanguard Health Care
Performance |
| Timeline |
| Citigroup |
| Vanguard Health Care |
Citigroup and Vanguard Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Vanguard Health
The main advantage of trading using opposite Citigroup and Vanguard Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Vanguard Health 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 Health will offset losses from the drop in Vanguard Health's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Vanguard Health vs. Vy T Rowe | Vanguard Health vs. Eaton Vance Atlanta | Vanguard Health vs. Blackrock Health Sciences | Vanguard Health vs. Blackrock Health Sciences |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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