Correlation Between Citigroup and The Missouri
Can any of the company-specific risk be diversified away by investing in both Citigroup and The Missouri 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 Missouri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and The Missouri Tax Free, you can compare the effects of market volatilities on Citigroup and The Missouri 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 Missouri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and The Missouri.
Diversification Opportunities for Citigroup and The Missouri
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and The is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and The Missouri Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Missouri Tax 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 Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Missouri Tax has no effect on the direction of Citigroup i.e., Citigroup and The Missouri go up and down completely randomly.
Pair Corralation between Citigroup and The Missouri
Taking into account the 90-day investment horizon Citigroup is expected to generate 10.39 times more return on investment than The Missouri. However, Citigroup is 10.39 times more volatile than The Missouri Tax Free. It trades about 0.07 of its potential returns per unit of risk. The Missouri Tax Free is currently generating about 0.14 per unit of risk. If you would invest 6,080 in Citigroup on August 28, 2024 and sell it today you would earn a total of 995.00 from holding Citigroup or generate 16.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Citigroup vs. The Missouri Tax Free
Performance |
| Timeline |
| Citigroup |
| Missouri Tax |
Citigroup and The Missouri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and The Missouri
The main advantage of trading using opposite Citigroup and The Missouri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, The Missouri 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 Missouri will offset losses from the drop in The Missouri's long position.The idea behind Citigroup and The Missouri Tax Free 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.| The Missouri vs. The Bond Fund | The Missouri vs. Franklin Missouri Tax Free | The Missouri vs. The National Tax Free | The Missouri vs. Eaton Vance Missouri |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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