Correlation Between Citigroup and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both Citigroup and Ameriprise Financial 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 Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Ameriprise Financial, you can compare the effects of market volatilities on Citigroup and Ameriprise Financial 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 Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Ameriprise Financial.
Diversification Opportunities for Citigroup and Ameriprise Financial
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and Ameriprise is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Citigroup i.e., Citigroup and Ameriprise Financial go up and down completely randomly.
Pair Corralation between Citigroup and Ameriprise Financial
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.23 times more return on investment than Ameriprise Financial. However, Citigroup is 1.23 times more volatile than Ameriprise Financial. It trades about 0.41 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.19 per unit of risk. If you would invest 6,977 in Citigroup on October 24, 2024 and sell it today you would earn a total of 1,022 from holding Citigroup or generate 14.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 88.89% |
Values | Daily Returns |
Citigroup vs. Ameriprise Financial
Performance |
Timeline |
Citigroup |
Ameriprise Financial |
Citigroup and Ameriprise Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Ameriprise Financial
The main advantage of trading using opposite Citigroup and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Ameriprise Financial 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 Ameriprise Financial will offset losses from the drop in Ameriprise Financial's long position.Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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