Correlation Between Citigroup and City Holding
Can any of the company-specific risk be diversified away by investing in both Citigroup and City Holding 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 City Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and City Holding, you can compare the effects of market volatilities on Citigroup and City Holding 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 City Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and City Holding.
Diversification Opportunities for Citigroup and City Holding
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and City is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and City Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Holding 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 City Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Holding has no effect on the direction of Citigroup i.e., Citigroup and City Holding go up and down completely randomly.
Pair Corralation between Citigroup and City Holding
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.82 times less return on investment than City Holding. In addition to that, Citigroup is 1.02 times more volatile than City Holding. It trades about 0.07 of its total potential returns per unit of risk. City Holding is currently generating about 0.12 per unit of volatility. If you would invest 10,088 in City Holding on August 29, 2024 and sell it today you would earn a total of 3,124 from holding City Holding or generate 30.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. City Holding
Performance |
| Timeline |
| Citigroup |
| City Holding |
Citigroup and City Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and City Holding
The main advantage of trading using opposite Citigroup and City Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, City Holding 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 City Holding will offset losses from the drop in City Holding's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| City Holding vs. Community West Bancshares | City Holding vs. Oak Valley Bancorp | City Holding vs. Home Federal Bancorp | City Holding vs. Magyar 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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