Correlation Between Citigroup and Arrow Financial
Can any of the company-specific risk be diversified away by investing in both Citigroup and Arrow 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 Arrow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Arrow Financial, you can compare the effects of market volatilities on Citigroup and Arrow 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 Arrow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Arrow Financial.
Diversification Opportunities for Citigroup and Arrow Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Arrow is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow 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 Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of Citigroup i.e., Citigroup and Arrow Financial go up and down completely randomly.
Pair Corralation between Citigroup and Arrow Financial
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.8 times more return on investment than Arrow Financial. However, Citigroup is 1.25 times less risky than Arrow Financial. It trades about 0.13 of its potential returns per unit of risk. Arrow Financial is currently generating about 0.09 per unit of risk. If you would invest 6,092 in Citigroup on September 3, 2024 and sell it today you would earn a total of 995.00 from holding Citigroup or generate 16.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Arrow Financial
Performance |
| Timeline |
| Citigroup |
| Arrow Financial |
Citigroup and Arrow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Arrow Financial
The main advantage of trading using opposite Citigroup and Arrow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Arrow 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 Arrow Financial will offset losses from the drop in Arrow Financial's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Arrow Financial vs. JPMorgan Chase Co | Arrow Financial vs. Citigroup | Arrow Financial vs. Wells Fargo | Arrow Financial vs. Toronto Dominion Bank |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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