Correlation Between Citigroup and SPDR SSGA
Can any of the company-specific risk be diversified away by investing in both Citigroup and SPDR SSGA 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 SPDR SSGA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and SPDR SSGA Sector, you can compare the effects of market volatilities on Citigroup and SPDR SSGA 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 SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and SPDR SSGA.
Diversification Opportunities for Citigroup and SPDR SSGA
Almost no diversification
The 3 months correlation between Citigroup and SPDR is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SPDR SSGA Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA 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 SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Sector has no effect on the direction of Citigroup i.e., Citigroup and SPDR SSGA go up and down completely randomly.
Pair Corralation between Citigroup and SPDR SSGA
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.62 times more return on investment than SPDR SSGA. However, Citigroup is 2.62 times more volatile than SPDR SSGA Sector. It trades about 0.2 of its potential returns per unit of risk. SPDR SSGA Sector is currently generating about 0.21 per unit of risk. If you would invest 6,412 in Citigroup on August 30, 2024 and sell it today you would earn a total of 604.00 from holding Citigroup or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. SPDR SSGA Sector
Performance |
| Timeline |
| Citigroup |
| SPDR SSGA Sector |
Citigroup and SPDR SSGA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and SPDR SSGA
The main advantage of trading using opposite Citigroup and SPDR SSGA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, SPDR SSGA 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 SPDR SSGA will offset losses from the drop in SPDR SSGA's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| SPDR SSGA vs. SPDR SSGA Fixed | SPDR SSGA vs. BlackRock Equity Factor | SPDR SSGA vs. SPDR FactSet Innovative | SPDR SSGA vs. SPDR SP Telecom |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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