Correlation Between Citigroup and Vanguard Global

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

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

Diversification Opportunities for Citigroup and Vanguard Global

0.08

Correlation Coefficient

Citigroup  Vanguard Global

Significant diversification

The 3 months correlation between Citigroup and Vanguard is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Vanguard Global Wellesley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Global Wellesley 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 Vanguard Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Global Wellesley has no effect on the direction of Citigroup i.e., Citigroup and Vanguard Global go up and down completely randomly.

Pair Corralation between Citigroup and Vanguard Global

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.82 times less return on investment than Vanguard Global. In addition to that, Citigroup is 6.82 times more volatile than Vanguard Global Wellesley. It trades about 0.01 of its total potential returns per unit of risk. Vanguard Global Wellesley is currently generating about 0.18 per unit of volatility. If you would invest  2,671  in Vanguard Global Wellesley on December 29, 2024 and sell it today you would earn a total of  89.00  from holding Vanguard Global Wellesley or generate 3.33% return on investment over 90 days.

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

Citigroup  vs.  Vanguard Global Wellesley

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Vanguard Global Wellesley

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Global Wellesley are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Vanguard Global

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

The idea behind Citigroup and Vanguard Global Wellesley 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.