Correlation Between Citigroup and VanEck Biotech
Can any of the company-specific risk be diversified away by investing in both Citigroup and VanEck Biotech 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 VanEck Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and VanEck Biotech ETF, you can compare the effects of market volatilities on Citigroup and VanEck Biotech 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 VanEck Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and VanEck Biotech.
Diversification Opportunities for Citigroup and VanEck Biotech
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and VanEck is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and VanEck Biotech ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Biotech ETF 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 VanEck Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Biotech ETF has no effect on the direction of Citigroup i.e., Citigroup and VanEck Biotech go up and down completely randomly.
Pair Corralation between Citigroup and VanEck Biotech
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.57 times more return on investment than VanEck Biotech. However, Citigroup is 1.57 times more volatile than VanEck Biotech ETF. It trades about 0.08 of its potential returns per unit of risk. VanEck Biotech ETF is currently generating about -0.22 per unit of risk. If you would invest 6,095 in Citigroup on January 25, 2024 and sell it today you would earn a total of 153.00 from holding Citigroup or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. VanEck Biotech ETF
Performance |
| Timeline |
| Citigroup |
| VanEck Biotech ETF |
Citigroup and VanEck Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and VanEck Biotech
The main advantage of trading using opposite Citigroup and VanEck Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, VanEck Biotech 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 VanEck Biotech will offset losses from the drop in VanEck Biotech's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| VanEck Biotech vs. iShares Insurance ETF | VanEck Biotech vs. SCOR PK | VanEck Biotech vs. Morningstar Unconstrained Allocation | VanEck Biotech vs. SPACE |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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