Correlation Between Citigroup and Xtrackers ESG
Can any of the company-specific risk be diversified away by investing in both Citigroup and Xtrackers ESG 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 Xtrackers ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Xtrackers ESG USD, you can compare the effects of market volatilities on Citigroup and Xtrackers ESG 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 Xtrackers ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Xtrackers ESG.
Diversification Opportunities for Citigroup and Xtrackers ESG
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Xtrackers is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Xtrackers ESG USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers ESG USD 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 Xtrackers ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers ESG USD has no effect on the direction of Citigroup i.e., Citigroup and Xtrackers ESG go up and down completely randomly.
Pair Corralation between Citigroup and Xtrackers ESG
Taking into account the 90-day investment horizon Citigroup is expected to generate 6.63 times more return on investment than Xtrackers ESG. However, Citigroup is 6.63 times more volatile than Xtrackers ESG USD. It trades about 0.38 of its potential returns per unit of risk. Xtrackers ESG USD is currently generating about 0.19 per unit of risk. If you would invest 7,100 in Citigroup on November 4, 2024 and sell it today you would earn a total of 1,043 from holding Citigroup or generate 14.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.91% |
| Values | Daily Returns |
Citigroup vs. Xtrackers ESG USD
Performance |
| Timeline |
| Citigroup |
| Xtrackers ESG USD |
Citigroup and Xtrackers ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Xtrackers ESG
The main advantage of trading using opposite Citigroup and Xtrackers ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Xtrackers ESG 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 Xtrackers ESG will offset losses from the drop in Xtrackers ESG's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Xtrackers ESG vs. Xtrackers MSCI | Xtrackers ESG vs. Xtrackers FTSE 250 | Xtrackers ESG vs. Xtrackers Ie Plc | Xtrackers ESG vs. Xtrackers Russell 2000 |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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