Correlation Between Citigroup and VanEck Bitcoin

Can any of the company-specific risk be diversified away by investing in both Citigroup and VanEck Bitcoin 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 VanEck Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and VanEck Bitcoin Trust, you can compare the effects of market volatilities on Citigroup and VanEck Bitcoin 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 VanEck Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and VanEck Bitcoin.

Diversification Opportunities for Citigroup and VanEck Bitcoin

0.9

Correlation Coefficient

Citigroup  VanEck Bitcoin

Almost no diversification

The 3 months correlation between Citigroup and VanEck is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and VanEck Bitcoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Bitcoin Trust 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 VanEck Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Bitcoin Trust has no effect on the direction of Citigroup i.e., Citigroup and VanEck Bitcoin go up and down completely randomly.

Pair Corralation between Citigroup and VanEck Bitcoin

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.99 times less return on investment than VanEck Bitcoin. But when comparing it to its historical volatility, Citigroup is 1.71 times less risky than VanEck Bitcoin. It trades about 0.11 of its potential returns per unit of risk. VanEck Bitcoin Trust is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  6,634  in VanEck Bitcoin Trust on August 30, 2024 and sell it today you would earn a total of  4,302  from holding VanEck Bitcoin Trust or generate 64.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  VanEck Bitcoin Trust

Citigroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

VanEck Bitcoin Trust

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Bitcoin Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental indicators, VanEck Bitcoin disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and VanEck Bitcoin

The main advantage of trading using opposite Citigroup and VanEck Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, VanEck Bitcoin 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 VanEck Bitcoin will offset losses from the drop in VanEck Bitcoin's long position.

The idea behind Citigroup and VanEck Bitcoin Trust 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.