Correlation Between Spotify Technology and Citigroup
Can any of the company-specific risk be diversified away by investing in both Spotify Technology and Citigroup 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 Spotify Technology and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Citigroup, you can compare the effects of market volatilities on Spotify Technology and Citigroup 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 Spotify Technology with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Citigroup.
Diversification Opportunities for Spotify Technology and Citigroup
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Spotify and Citigroup is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Spotify Technology 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 Spotify Technology SA are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Spotify Technology i.e., Spotify Technology and Citigroup go up and down completely randomly.
Pair Corralation between Spotify Technology and Citigroup
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.58 times more return on investment than Citigroup. However, Spotify Technology is 1.58 times more volatile than Citigroup. It trades about 0.36 of its potential returns per unit of risk. Citigroup is currently generating about 0.32 per unit of risk. If you would invest 56,600 in Spotify Technology SA on August 31, 2024 and sell it today you would earn a total of 14,622 from holding Spotify Technology SA or generate 25.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spotify Technology SA vs. Citigroup
Performance |
| Timeline |
| Spotify Technology |
| Citigroup |
Spotify Technology and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Citigroup
The main advantage of trading using opposite Spotify Technology and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.| Spotify Technology vs. Alphabet | Spotify Technology vs. Meta Platforms | Spotify Technology vs. Baidu Inc | Spotify Technology vs. Autohome |
| Citigroup vs. Uber Technologies | Citigroup vs. Delta Air Lines | Citigroup vs. Take Two Interactive Software | Citigroup vs. The Home Depot |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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