Correlation Between MicroSectorsTM Oil and CitiGroup
Can any of the company-specific risk be diversified away by investing in both MicroSectorsTM Oil 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 MicroSectorsTM Oil and CitiGroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectorsTM Oil Gas and CitiGroup, you can compare the effects of market volatilities on MicroSectorsTM Oil 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 MicroSectorsTM Oil with a short position of CitiGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectorsTM Oil and CitiGroup.
Diversification Opportunities for MicroSectorsTM Oil and CitiGroup
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectorsTM and CitiGroup is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectorsTM Oil Gas and CitiGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CitiGroup and MicroSectorsTM Oil 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 MicroSectorsTM Oil Gas 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 MicroSectorsTM Oil i.e., MicroSectorsTM Oil and CitiGroup go up and down completely randomly.
Pair Corralation between MicroSectorsTM Oil and CitiGroup
If you would invest (100.00) in CitiGroup on February 12, 2024 and sell it today you would earn a total of 100.00 from holding CitiGroup or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
MicroSectorsTM Oil Gas vs. CitiGroup
Performance |
Timeline |
MicroSectorsTM Oil Gas |
CitiGroup |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MicroSectorsTM Oil and CitiGroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MicroSectorsTM Oil and CitiGroup
The main advantage of trading using opposite MicroSectorsTM Oil and CitiGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectorsTM Oil 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.MicroSectorsTM Oil vs. MicroSectorsTM Oil Gas | MicroSectorsTM Oil vs. MicroSectors Big Oil | MicroSectorsTM Oil vs. UBS ETRACS | MicroSectorsTM Oil vs. Drum Income Plus |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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