Correlation Between VMware and Citigroup
Can any of the company-specific risk be diversified away by investing in both VMware 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 VMware and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VMware Inc and Citigroup, you can compare the effects of market volatilities on VMware 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 VMware with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of VMware and Citigroup.
Diversification Opportunities for VMware and Citigroup
Very good diversification
The 3 months correlation between VMware and Citigroup is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and VMware 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 VMware Inc 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 VMware i.e., VMware and Citigroup go up and down completely randomly.
Pair Corralation between VMware and Citigroup
Considering the 90-day investment horizon VMware Inc is expected to generate 1.15 times more return on investment than Citigroup. However, VMware is 1.15 times more volatile than Citigroup. It trades about 0.06 of its potential returns per unit of risk. Citigroup is currently generating about 0.04 per unit of risk. If you would invest 9,571 in VMware Inc on February 9, 2024 and sell it today you would earn a total of 4,677 from holding VMware Inc or generate 48.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.92% |
| Values | Daily Returns |
VMware Inc vs. Citigroup
Performance |
| Timeline |
| VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Citigroup |
VMware and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VMware and Citigroup
The main advantage of trading using opposite VMware and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware 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.The idea behind VMware Inc and Citigroup pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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