Correlation Between Citigroup and Simplify Volatility
Can any of the company-specific risk be diversified away by investing in both Citigroup and Simplify Volatility 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 Simplify Volatility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Simplify Volatility Premium, you can compare the effects of market volatilities on Citigroup and Simplify Volatility 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 Simplify Volatility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Simplify Volatility.
Diversification Opportunities for Citigroup and Simplify Volatility
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Simplify is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Simplify Volatility Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Volatility 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 Simplify Volatility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Volatility has no effect on the direction of Citigroup i.e., Citigroup and Simplify Volatility go up and down completely randomly.
Pair Corralation between Citigroup and Simplify Volatility
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.52 times more return on investment than Simplify Volatility. However, Citigroup is 1.92 times less risky than Simplify Volatility. It trades about 0.39 of its potential returns per unit of risk. Simplify Volatility Premium is currently generating about 0.08 per unit of risk. If you would invest 6,789 in Citigroup on April 25, 2025 and sell it today you would earn a total of 2,810 from holding Citigroup or generate 41.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. Simplify Volatility Premium
Performance |
Timeline |
Citigroup |
Simplify Volatility |
Citigroup and Simplify Volatility Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Simplify Volatility
The main advantage of trading using opposite Citigroup and Simplify Volatility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Simplify Volatility 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 Simplify Volatility will offset losses from the drop in Simplify Volatility's long position.Citigroup vs. Bank of America | Citigroup vs. Wells Fargo | Citigroup vs. JPMorgan Chase Co | Citigroup vs. Toronto Dominion Bank |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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