Correlation Between Citigroup and Alger Responsible
Can any of the company-specific risk be diversified away by investing in both Citigroup and Alger Responsible 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 Alger Responsible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Alger Responsible Investing, you can compare the effects of market volatilities on Citigroup and Alger Responsible 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 Alger Responsible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Alger Responsible.
Diversification Opportunities for Citigroup and Alger Responsible
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Alger is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Alger Responsible Investing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Responsible 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 Alger Responsible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Responsible has no effect on the direction of Citigroup i.e., Citigroup and Alger Responsible go up and down completely randomly.
Pair Corralation between Citigroup and Alger Responsible
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.22 times more return on investment than Alger Responsible. However, Citigroup is 2.22 times more volatile than Alger Responsible Investing. It trades about 0.15 of its potential returns per unit of risk. Alger Responsible Investing is currently generating about 0.13 per unit of risk. If you would invest 6,133 in Citigroup on August 28, 2024 and sell it today you would earn a total of 842.00 from holding Citigroup or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Alger Responsible Investing
Performance |
| Timeline |
| Citigroup |
| Alger Responsible |
Citigroup and Alger Responsible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Alger Responsible
The main advantage of trading using opposite Citigroup and Alger Responsible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Alger Responsible 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 Alger Responsible will offset losses from the drop in Alger Responsible's long position.The idea behind Citigroup and Alger Responsible Investing pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Alger Responsible vs. Transamerica Financial Life | Alger Responsible vs. John Hancock Financial | Alger Responsible vs. Blackrock Financial Institutions | Alger Responsible vs. Angel Oak Financial |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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