Correlation Between Citigroup and Davidson Multi-cap
Can any of the company-specific risk be diversified away by investing in both Citigroup and Davidson Multi-cap 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 Davidson Multi-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Davidson Multi Cap Equity, you can compare the effects of market volatilities on Citigroup and Davidson Multi-cap 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 Davidson Multi-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Davidson Multi-cap.
Diversification Opportunities for Citigroup and Davidson Multi-cap
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Davidson is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Davidson Multi Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davidson Multi Cap 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 Davidson Multi-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davidson Multi Cap has no effect on the direction of Citigroup i.e., Citigroup and Davidson Multi-cap go up and down completely randomly.
Pair Corralation between Citigroup and Davidson Multi-cap
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.28 times more return on investment than Davidson Multi-cap. However, Citigroup is 2.28 times more volatile than Davidson Multi Cap Equity. It trades about 0.11 of its potential returns per unit of risk. Davidson Multi Cap Equity is currently generating about 0.13 per unit of risk. If you would invest 4,714 in Citigroup on September 3, 2024 and sell it today you would earn a total of 2,425 from holding Citigroup or generate 51.44% 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. Davidson Multi Cap Equity
Performance |
| Timeline |
| Citigroup |
| Davidson Multi Cap |
Citigroup and Davidson Multi-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Davidson Multi-cap
The main advantage of trading using opposite Citigroup and Davidson Multi-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Davidson Multi-cap 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 Davidson Multi-cap will offset losses from the drop in Davidson Multi-cap's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Davidson Multi-cap vs. Davidson Multi Cap Equity | Davidson Multi-cap vs. Prudential Jennison International | Davidson Multi-cap vs. Fidelity New Markets |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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