Correlation Between Citigroup and Carter Bank
Can any of the company-specific risk be diversified away by investing in both Citigroup and Carter Bank 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 Carter Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Carter Bank and, you can compare the effects of market volatilities on Citigroup and Carter Bank 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 Carter Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Carter Bank.
Diversification Opportunities for Citigroup and Carter Bank
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Carter is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Carter Bank and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carter Bank 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 Carter Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carter Bank has no effect on the direction of Citigroup i.e., Citigroup and Carter Bank go up and down completely randomly.
Pair Corralation between Citigroup and Carter Bank
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.77 times more return on investment than Carter Bank. However, Citigroup is 1.3 times less risky than Carter Bank. It trades about 0.15 of its potential returns per unit of risk. Carter Bank and is currently generating about 0.1 per unit of risk. If you would invest 3,769 in Citigroup on August 27, 2024 and sell it today you would earn a total of 3,215 from holding Citigroup or generate 85.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Carter Bank and
Performance |
| Timeline |
| Citigroup |
| Carter Bank |
Citigroup and Carter Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Carter Bank
The main advantage of trading using opposite Citigroup and Carter Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Carter Bank 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 Carter Bank will offset losses from the drop in Carter Bank's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Carter Bank vs. Home Bancorp | Carter Bank vs. Community West Bancshares | Carter Bank vs. First Community | Carter Bank vs. Great Southern Bancorp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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