Correlation Between Citigroup and Foreign Bond
Can any of the company-specific risk be diversified away by investing in both Citigroup and Foreign Bond 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 Foreign Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Foreign Bond Fund, you can compare the effects of market volatilities on Citigroup and Foreign Bond 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 Foreign Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Foreign Bond.
Diversification Opportunities for Citigroup and Foreign Bond
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and Foreign is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Foreign Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Bond 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 Foreign Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Bond has no effect on the direction of Citigroup i.e., Citigroup and Foreign Bond go up and down completely randomly.
Pair Corralation between Citigroup and Foreign Bond
Taking into account the 90-day investment horizon Citigroup is expected to generate 5.01 times more return on investment than Foreign Bond. However, Citigroup is 5.01 times more volatile than Foreign Bond Fund. It trades about 0.05 of its potential returns per unit of risk. Foreign Bond Fund is currently generating about -0.31 per unit of risk. If you would invest 6,166 in Citigroup on January 26, 2024 and sell it today you would earn a total of 81.00 from holding Citigroup or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Foreign Bond Fund
Performance |
| Timeline |
| Citigroup |
| Foreign Bond |
Citigroup and Foreign Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Foreign Bond
The main advantage of trading using opposite Citigroup and Foreign Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Foreign Bond 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 Foreign Bond will offset losses from the drop in Foreign Bond's long position.| Citigroup vs. Aquagold International | Citigroup vs. Thrivent High Yield | Citigroup vs. Morningstar Unconstrained Allocation | Citigroup vs. Via Renewables |
| Foreign Bond vs. Gold And Precious | Foreign Bond vs. International Investors Gold | Foreign Bond vs. Gamco Global Gold | Foreign Bond vs. Franklin Gold Precious |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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