Correlation Between Citigroup and BMO Low
Can any of the company-specific risk be diversified away by investing in both Citigroup and BMO Low 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 BMO Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and BMO Low Volatility, you can compare the effects of market volatilities on Citigroup and BMO Low 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 BMO Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BMO Low.
Diversification Opportunities for Citigroup and BMO Low
Modest diversification
The 3 months correlation between Citigroup and BMO is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BMO Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO Low Volatility 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 BMO Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO Low Volatility has no effect on the direction of Citigroup i.e., Citigroup and BMO Low go up and down completely randomly.
Pair Corralation between Citigroup and BMO Low
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.56 times more return on investment than BMO Low. However, Citigroup is 2.56 times more volatile than BMO Low Volatility. It trades about 0.07 of its potential returns per unit of risk. BMO Low Volatility is currently generating about 0.08 per unit of risk. If you would invest 6,117 in Citigroup on August 29, 2024 and sell it today you would earn a total of 899.00 from holding Citigroup or generate 14.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Citigroup vs. BMO Low Volatility
Performance |
| Timeline |
| Citigroup |
| BMO Low Volatility |
Citigroup and BMO Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and BMO Low
The main advantage of trading using opposite Citigroup and BMO Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, BMO Low 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 BMO Low will offset losses from the drop in BMO Low's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| BMO Low vs. BMO Low Volatility | BMO Low vs. BMO International Dividend | BMO Low vs. BMO MSCI Canada | BMO Low vs. BMO MSCI EAFE |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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