Correlation Between Capital Point and Citigroup
Can any of the company-specific risk be diversified away by investing in both Capital Point 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 Capital Point and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Point and Citigroup, you can compare the effects of market volatilities on Capital Point 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 Capital Point with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Point and Citigroup.
Diversification Opportunities for Capital Point and Citigroup
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capital and Citigroup is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Capital Point and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Capital Point 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 Capital Point 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 Capital Point i.e., Capital Point and Citigroup go up and down completely randomly.
Pair Corralation between Capital Point and Citigroup
Assuming the 90 days trading horizon Capital Point is expected to under-perform the Citigroup. In addition to that, Capital Point is 1.08 times more volatile than Citigroup. It trades about -0.05 of its total potential returns per unit of risk. Citigroup is currently generating about 0.21 per unit of volatility. If you would invest 5,346 in Citigroup on February 12, 2024 and sell it today you would earn a total of 1,007 from holding Citigroup or generate 18.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 76.56% |
| Values | Daily Returns |
Capital Point vs. Citigroup
Performance |
| Timeline |
| Capital Point |
| Citigroup |
Capital Point and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Point and Citigroup
The main advantage of trading using opposite Capital Point and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Point 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.| Capital Point vs. Clal Insurance Enterprises | Capital Point vs. Bank Hapoalim | Capital Point vs. Bank Leumi Le Israel |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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