Correlation Between Citigroup and Columbia Balanced
Can any of the company-specific risk be diversified away by investing in both Citigroup and Columbia Balanced 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 Columbia Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Columbia Balanced Fund, you can compare the effects of market volatilities on Citigroup and Columbia Balanced 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 Columbia Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Columbia Balanced.
Diversification Opportunities for Citigroup and Columbia Balanced
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Columbia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Columbia Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Balanced 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 Columbia Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Balanced has no effect on the direction of Citigroup i.e., Citigroup and Columbia Balanced go up and down completely randomly.
Pair Corralation between Citigroup and Columbia Balanced
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.29 times more return on investment than Columbia Balanced. However, Citigroup is 3.29 times more volatile than Columbia Balanced Fund. It trades about 0.1 of its potential returns per unit of risk. Columbia Balanced Fund is currently generating about 0.12 per unit of risk. If you would invest 4,959 in Citigroup on August 25, 2024 and sell it today you would earn a total of 2,025 from holding Citigroup or generate 40.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Columbia Balanced Fund
Performance |
| Timeline |
| Citigroup |
| Columbia Balanced |
Citigroup and Columbia Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Columbia Balanced
The main advantage of trading using opposite Citigroup and Columbia Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Columbia Balanced 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 Columbia Balanced will offset losses from the drop in Columbia Balanced's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Columbia Balanced vs. Columbia Mid Cap | Columbia Balanced vs. Columbia Small Cap | Columbia Balanced vs. Columbia Real Estate | Columbia Balanced vs. Aquagold International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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