Correlation Between Citigroup and Direct Capital
Can any of the company-specific risk be diversified away by investing in both Citigroup and Direct Capital 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 Direct Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Direct Capital Investments, you can compare the effects of market volatilities on Citigroup and Direct Capital 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 Direct Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Direct Capital.
Diversification Opportunities for Citigroup and Direct Capital
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Citigroup and Direct is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Direct Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Capital Inves 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 Direct Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Capital Inves has no effect on the direction of Citigroup i.e., Citigroup and Direct Capital go up and down completely randomly.
Pair Corralation between Citigroup and Direct Capital
Taking into account the 90-day investment horizon Citigroup is expected to generate 46.4 times less return on investment than Direct Capital. But when comparing it to its historical volatility, Citigroup is 43.47 times less risky than Direct Capital. It trades about 0.08 of its potential returns per unit of risk. Direct Capital Investments is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,500 in Direct Capital Investments on August 29, 2024 and sell it today you would earn a total of 83,500 from holding Direct Capital Investments or generate 1284.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 74.64% |
| Values | Daily Returns |
Citigroup vs. Direct Capital Investments
Performance |
| Timeline |
| Citigroup |
| Direct Capital Inves |
Citigroup and Direct Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Direct Capital
The main advantage of trading using opposite Citigroup and Direct Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Direct Capital 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 Direct Capital will offset losses from the drop in Direct Capital's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Direct Capital vs. Nice | Direct Capital vs. The Gold Bond | Direct Capital vs. Bank Leumi Le Israel | Direct Capital vs. ICL Israel Chemicals |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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