Correlation Between Citigroup and CNB Financial
Can any of the company-specific risk be diversified away by investing in both Citigroup and CNB 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 CNB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and CNB Financial, you can compare the effects of market volatilities on Citigroup and CNB 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 CNB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and CNB Financial.
Diversification Opportunities for Citigroup and CNB Financial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and CNB is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CNB Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNB 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 CNB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNB Financial has no effect on the direction of Citigroup i.e., Citigroup and CNB Financial go up and down completely randomly.
Pair Corralation between Citigroup and CNB Financial
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.36 times more return on investment than CNB Financial. However, Citigroup is 1.36 times more volatile than CNB Financial. It trades about 0.13 of its potential returns per unit of risk. CNB Financial is currently generating about 0.08 per unit of risk. If you would invest 6,104 in Citigroup on August 28, 2024 and sell it today you would earn a total of 971.00 from holding Citigroup or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. CNB Financial
Performance |
| Timeline |
| Citigroup |
| CNB Financial |
Citigroup and CNB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and CNB Financial
The main advantage of trading using opposite Citigroup and CNB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, CNB 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 CNB Financial will offset losses from the drop in CNB Financial's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| CNB Financial vs. Capital One Financial | CNB Financial vs. Capital One Financial | CNB Financial vs. Bank of America |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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