Correlation Between Citigroup and Associated Banc
Can any of the company-specific risk be diversified away by investing in both Citigroup and Associated Banc 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 Associated Banc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Associated Banc Corp, you can compare the effects of market volatilities on Citigroup and Associated Banc 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 Associated Banc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Associated Banc.
Diversification Opportunities for Citigroup and Associated Banc
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Associated is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Associated Banc Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Banc Corp 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 Associated Banc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Banc Corp has no effect on the direction of Citigroup i.e., Citigroup and Associated Banc go up and down completely randomly.
Pair Corralation between Citigroup and Associated Banc
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.48 times less return on investment than Associated Banc. But when comparing it to its historical volatility, Citigroup is 1.38 times less risky than Associated Banc. It trades about 0.11 of its potential returns per unit of risk. Associated Banc Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,242 in Associated Banc Corp on August 28, 2024 and sell it today you would earn a total of 477.00 from holding Associated Banc Corp or generate 21.28% 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. Associated Banc Corp
Performance |
| Timeline |
| Citigroup |
| Associated Banc Corp |
Citigroup and Associated Banc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Associated Banc
The main advantage of trading using opposite Citigroup and Associated Banc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Associated Banc 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 Associated Banc will offset losses from the drop in Associated Banc's long position.The idea behind Citigroup and Associated Banc Corp 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.| Associated Banc vs. Fifth Third Bancorp | Associated Banc vs. Huntington Bancshares Incorporated | Associated Banc vs. MT 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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