Correlation Between Citigroup and The Midcap
Can any of the company-specific risk be diversified away by investing in both Citigroup and The Midcap 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 The Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and The Midcap Growth, you can compare the effects of market volatilities on Citigroup and The Midcap 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 The Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and The Midcap.
Diversification Opportunities for Citigroup and The Midcap
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and The is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and The Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Growth 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 The Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Growth has no effect on the direction of Citigroup i.e., Citigroup and The Midcap go up and down completely randomly.
Pair Corralation between Citigroup and The Midcap
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.88 times more return on investment than The Midcap. However, Citigroup is 1.88 times more volatile than The Midcap Growth. It trades about 0.2 of its potential returns per unit of risk. The Midcap Growth is currently generating about 0.25 per unit of risk. If you would invest 6,412 in Citigroup on August 30, 2024 and sell it today you would earn a total of 604.00 from holding Citigroup or generate 9.42% 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. The Midcap Growth
Performance |
| Timeline |
| Citigroup |
| Midcap Growth |
Citigroup and The Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and The Midcap
The main advantage of trading using opposite Citigroup and The Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, The Midcap 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 The Midcap will offset losses from the drop in The Midcap's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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