Correlation Between International Business and Citigroup
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Citigroup, you can compare the effects of market volatilities on International Business 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 International Business with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Citigroup.
Diversification Opportunities for International Business and Citigroup
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Citigroup is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and International Business 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 International Business Machines 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 International Business i.e., International Business and Citigroup go up and down completely randomly.
Pair Corralation between International Business and Citigroup
Considering the 90-day investment horizon International Business Machines is expected to under-perform the Citigroup. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 1.88 times less risky than Citigroup. The stock trades about -0.19 of its potential returns per unit of risk. The Citigroup is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,095 in Citigroup on January 25, 2024 and sell it today you would earn a total of 172.00 from holding Citigroup or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Citigroup
Performance |
| Timeline |
| International Business |
| Citigroup |
International Business and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Citigroup
The main advantage of trading using opposite International Business and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. FiscalNote Holdings | International Business vs. Innodata | International Business vs. Aurora Innovation | International Business vs. Conduent |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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