Correlation Between Citigroup and Innovator Equity
Can any of the company-specific risk be diversified away by investing in both Citigroup and Innovator Equity 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 Innovator Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Innovator Equity Defined, you can compare the effects of market volatilities on Citigroup and Innovator Equity 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 Innovator Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Innovator Equity.
Diversification Opportunities for Citigroup and Innovator Equity
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citigroup and Innovator is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Innovator Equity Defined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Equity Defined 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 Innovator Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Equity Defined has no effect on the direction of Citigroup i.e., Citigroup and Innovator Equity go up and down completely randomly.
Pair Corralation between Citigroup and Innovator Equity
Taking into account the 90-day investment horizon Citigroup is expected to generate 8.04 times more return on investment than Innovator Equity. However, Citigroup is 8.04 times more volatile than Innovator Equity Defined. It trades about 0.27 of its potential returns per unit of risk. Innovator Equity Defined is currently generating about 0.21 per unit of risk. If you would invest 6,889 in Citigroup on September 14, 2024 and sell it today you would earn a total of 307.00 from holding Citigroup or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Innovator Equity Defined
Performance |
| Timeline |
| Citigroup |
| Innovator Equity Defined |
Citigroup and Innovator Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Innovator Equity
The main advantage of trading using opposite Citigroup and Innovator Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Innovator Equity 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 Innovator Equity will offset losses from the drop in Innovator Equity's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| Innovator Equity vs. First Trust Cboe | Innovator Equity vs. FT Cboe Vest | Innovator Equity vs. Innovator SP 500 | Innovator Equity vs. Innovator SP 500 |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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