Correlation Between Citigroup and Destinations Municipal
Can any of the company-specific risk be diversified away by investing in both Citigroup and Destinations Municipal 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 Destinations Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Destinations Municipal Fixed, you can compare the effects of market volatilities on Citigroup and Destinations Municipal 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 Destinations Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Destinations Municipal.
Diversification Opportunities for Citigroup and Destinations Municipal
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Destinations is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Destinations Municipal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations Municipal 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 Destinations Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations Municipal has no effect on the direction of Citigroup i.e., Citigroup and Destinations Municipal go up and down completely randomly.
Pair Corralation between Citigroup and Destinations Municipal
Taking into account the 90-day investment horizon Citigroup is expected to generate 8.05 times more return on investment than Destinations Municipal. However, Citigroup is 8.05 times more volatile than Destinations Municipal Fixed. It trades about 0.27 of its potential returns per unit of risk. Destinations Municipal Fixed is currently generating about 0.15 per unit of risk. If you would invest 6,315 in Citigroup on September 2, 2024 and sell it today you would earn a total of 772.00 from holding Citigroup or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Destinations Municipal Fixed
Performance |
| Timeline |
| Citigroup |
| Destinations Municipal |
Citigroup and Destinations Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Destinations Municipal
The main advantage of trading using opposite Citigroup and Destinations Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Destinations Municipal 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 Destinations Municipal will offset losses from the drop in Destinations Municipal's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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