Correlation Between Citigroup Capital and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Citigroup Capital and Wells Fargo 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 Capital and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup Capital XIII and Wells Fargo, you can compare the effects of market volatilities on Citigroup Capital and Wells Fargo 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 Capital with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup Capital and Wells Fargo.
Diversification Opportunities for Citigroup Capital and Wells Fargo
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Wells is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup Capital XIII and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Citigroup Capital 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 Capital XIII are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo has no effect on the direction of Citigroup Capital i.e., Citigroup Capital and Wells Fargo go up and down completely randomly.
Pair Corralation between Citigroup Capital and Wells Fargo
Given the investment horizon of 90 days Citigroup Capital XIII is expected to generate 0.24 times more return on investment than Wells Fargo. However, Citigroup Capital XIII is 4.17 times less risky than Wells Fargo. It trades about -0.14 of its potential returns per unit of risk. Wells Fargo is currently generating about -0.07 per unit of risk. If you would invest 3,035 in Citigroup Capital XIII on August 30, 2024 and sell it today you would lose (22.00) from holding Citigroup Capital XIII or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup Capital XIII vs. Wells Fargo
Performance |
| Timeline |
| Citigroup Capital XIII |
| Wells Fargo |
Citigroup Capital and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup Capital and Wells Fargo
The main advantage of trading using opposite Citigroup Capital and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup Capital position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Citigroup Capital vs. Merrill Lynch Capital | Citigroup Capital vs. Morgan Stanley | Citigroup Capital vs. Aquagold International | Citigroup Capital vs. Morningstar Unconstrained Allocation |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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