Correlation Between Citigroup and Advantage Solutions
Can any of the company-specific risk be diversified away by investing in both Citigroup and Advantage Solutions 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 Advantage Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Advantage Solutions, you can compare the effects of market volatilities on Citigroup and Advantage Solutions 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 Advantage Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Advantage Solutions.
Diversification Opportunities for Citigroup and Advantage Solutions
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Advantage is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Advantage Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Solutions 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 Advantage Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Solutions has no effect on the direction of Citigroup i.e., Citigroup and Advantage Solutions go up and down completely randomly.
Pair Corralation between Citigroup and Advantage Solutions
Taking into account the 90-day investment horizon Citigroup is expected to generate 8.98 times less return on investment than Advantage Solutions. But when comparing it to its historical volatility, Citigroup is 12.15 times less risky than Advantage Solutions. It trades about 0.08 of its potential returns per unit of risk. Advantage Solutions is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Advantage Solutions on August 31, 2024 and sell it today you would lose (8.08) from holding Advantage Solutions or give up 73.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 75.13% |
| Values | Daily Returns |
Citigroup vs. Advantage Solutions
Performance |
| Timeline |
| Citigroup |
| Advantage Solutions |
Citigroup and Advantage Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Advantage Solutions
The main advantage of trading using opposite Citigroup and Advantage Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Advantage Solutions 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 Advantage Solutions will offset losses from the drop in Advantage Solutions' 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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