Correlation Between Citigroup and Adams Diversified
Can any of the company-specific risk be diversified away by investing in both Citigroup and Adams Diversified 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 Adams Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Adams Diversified Equity, you can compare the effects of market volatilities on Citigroup and Adams Diversified 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 Adams Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Adams Diversified.
Diversification Opportunities for Citigroup and Adams Diversified
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Adams is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Adams Diversified Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Diversified Equity 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 Adams Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Diversified Equity has no effect on the direction of Citigroup i.e., Citigroup and Adams Diversified go up and down completely randomly.
Pair Corralation between Citigroup and Adams Diversified
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.52 times more return on investment than Adams Diversified. However, Citigroup is 2.52 times more volatile than Adams Diversified Equity. It trades about 0.21 of its potential returns per unit of risk. Adams Diversified Equity is currently generating about 0.2 per unit of risk. If you would invest 6,255 in Citigroup on August 24, 2024 and sell it today you would earn a total of 640.00 from holding Citigroup or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Adams Diversified Equity
Performance |
| Timeline |
| Citigroup |
| Adams Diversified Equity |
Citigroup and Adams Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Adams Diversified
The main advantage of trading using opposite Citigroup and Adams Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Adams Diversified 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 Adams Diversified will offset losses from the drop in Adams Diversified's long position.| Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Royal Bank of | Citigroup vs. JPMorgan Chase Co |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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