Correlation Between Citigroup and VSE
Can any of the company-specific risk be diversified away by investing in both Citigroup and VSE 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 VSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and VSE Corporation, you can compare the effects of market volatilities on Citigroup and VSE 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 VSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and VSE.
Diversification Opportunities for Citigroup and VSE
Very poor diversification
The 3 months correlation between Citigroup and VSE is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and VSE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VSE Corporation 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 VSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VSE Corporation has no effect on the direction of Citigroup i.e., Citigroup and VSE go up and down completely randomly.
Pair Corralation between Citigroup and VSE
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.21 times less return on investment than VSE. But when comparing it to its historical volatility, Citigroup is 1.33 times less risky than VSE. It trades about 0.23 of its potential returns per unit of risk. VSE Corporation is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 10,470 in VSE Corporation on August 27, 2024 and sell it today you would earn a total of 1,228 from holding VSE Corporation or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. VSE Corp.
Performance |
| Timeline |
| Citigroup |
| VSE Corporation |
Citigroup and VSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and VSE
The main advantage of trading using opposite Citigroup and VSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, VSE 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 VSE will offset losses from the drop in VSE's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| VSE vs. Park Electrochemical | VSE vs. Innovative Solutions and | VSE vs. Curtiss Wright | VSE vs. National Presto Industries |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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