Correlation Between Citigroup and Technology Select
Can any of the company-specific risk be diversified away by investing in both Citigroup and Technology Select 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 Technology Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Technology Select Sector, you can compare the effects of market volatilities on Citigroup and Technology Select 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 Technology Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Technology Select.
Diversification Opportunities for Citigroup and Technology Select
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Technology is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Technology Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Select Sector 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 Technology Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Select Sector has no effect on the direction of Citigroup i.e., Citigroup and Technology Select go up and down completely randomly.
Pair Corralation between Citigroup and Technology Select
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.67 times more return on investment than Technology Select. However, Citigroup is 1.67 times more volatile than Technology Select Sector. It trades about 0.21 of its potential returns per unit of risk. Technology Select Sector is currently generating about 0.08 per unit of risk. If you would invest 6,255 in Citigroup on August 24, 2024 and sell it today you would earn a total of 640.00 from holding Citigroup or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Technology Select Sector
Performance |
| Timeline |
| Citigroup |
| Technology Select Sector |
Citigroup and Technology Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Technology Select
The main advantage of trading using opposite Citigroup and Technology Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Technology Select 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 Technology Select will offset losses from the drop in Technology Select's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Technology Select vs. First Trust Exchange Traded | Technology Select vs. Ultimus Managers Trust | Technology Select vs. Horizon Kinetics Medical | Technology Select vs. Harbor Health Care |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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