Correlation Between Citigroup and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Citigroup and Fubon Financial 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 Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Fubon Financial Holding, you can compare the effects of market volatilities on Citigroup and Fubon Financial 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 Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Fubon Financial.
Diversification Opportunities for Citigroup and Fubon Financial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Fubon is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Fubon Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Financial Holding 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 Fubon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Financial Holding has no effect on the direction of Citigroup i.e., Citigroup and Fubon Financial go up and down completely randomly.
Pair Corralation between Citigroup and Fubon Financial
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.37 times more return on investment than Fubon Financial. However, Citigroup is 1.37 times more volatile than Fubon Financial Holding. It trades about 0.01 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about -0.18 per unit of risk. If you would invest 6,095 in Citigroup on January 24, 2024 and sell it today you would earn a total of 0.00 from holding Citigroup or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Citigroup vs. Fubon Financial Holding
Performance |
| Timeline |
| Citigroup |
| Fubon Financial Holding |
Citigroup and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Fubon Financial
The main advantage of trading using opposite Citigroup and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Fubon Financial 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 Fubon Financial will offset losses from the drop in Fubon Financial's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Fubon Financial vs. Kworld Computer Co | Fubon Financial vs. RiTdisplay Corp | Fubon Financial vs. Tai Tung Communication | Fubon Financial vs. Wistron Information Technology |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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