Correlation Between Citigroup and Alger Smallcap
Can any of the company-specific risk be diversified away by investing in both Citigroup and Alger Smallcap 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 Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Alger Smallcap Growth, you can compare the effects of market volatilities on Citigroup and Alger Smallcap 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 Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Alger Smallcap.
Diversification Opportunities for Citigroup and Alger Smallcap
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 Smallcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Smallcap Growth 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 Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Smallcap Growth has no effect on the direction of Citigroup i.e., Citigroup and Alger Smallcap go up and down completely randomly.
Pair Corralation between Citigroup and Alger Smallcap
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.26 times more return on investment than Alger Smallcap. However, Citigroup is 1.26 times more volatile than Alger Smallcap Growth. It trades about 0.33 of its potential returns per unit of risk. Alger Smallcap Growth is currently generating about 0.3 per unit of risk. If you would invest 6,235 in Citigroup on September 3, 2024 and sell it today you would earn a total of 904.00 from holding Citigroup or generate 14.5% 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 Smallcap Growth
Performance |
| Timeline |
| Citigroup |
| Alger Smallcap Growth |
Citigroup and Alger Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Alger Smallcap
The main advantage of trading using opposite Citigroup and Alger Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Alger Smallcap 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 Smallcap will offset losses from the drop in Alger Smallcap's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Alger Smallcap vs. Allianzgi Convertible Income | Alger Smallcap vs. Advent Claymore Convertible | Alger Smallcap vs. Calamos Dynamic Convertible | Alger Smallcap vs. Fidelity Sai Convertible |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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