Correlation Between Citigroup and Aura Investments
Can any of the company-specific risk be diversified away by investing in both Citigroup and Aura Investments 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 Aura Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Aura Investments, you can compare the effects of market volatilities on Citigroup and Aura Investments 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 Aura Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Aura Investments.
Diversification Opportunities for Citigroup and Aura Investments
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Aura is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aura Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Investments 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 Aura Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Investments has no effect on the direction of Citigroup i.e., Citigroup and Aura Investments go up and down completely randomly.
Pair Corralation between Citigroup and Aura Investments
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.64 times less return on investment than Aura Investments. But when comparing it to its historical volatility, Citigroup is 2.12 times less risky than Aura Investments. It trades about 0.17 of its potential returns per unit of risk. Aura Investments is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 130,152 in Aura Investments on January 24, 2024 and sell it today you would earn a total of 14,048 from holding Aura Investments or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 78.05% |
| Values | Daily Returns |
Citigroup vs. Aura Investments
Performance |
| Timeline |
| Citigroup |
| Aura Investments |
Citigroup and Aura Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Aura Investments
The main advantage of trading using opposite Citigroup and Aura Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Aura Investments 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 Aura Investments will offset losses from the drop in Aura Investments' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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