Correlation Between Citigroup and Edgewood Growth
Can any of the company-specific risk be diversified away by investing in both Citigroup and Edgewood Growth 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 Edgewood Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Edgewood Growth Fund, you can compare the effects of market volatilities on Citigroup and Edgewood Growth 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 Edgewood Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Edgewood Growth.
Diversification Opportunities for Citigroup and Edgewood Growth
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Edgewood is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Edgewood Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewood Growth 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 Edgewood Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewood Growth has no effect on the direction of Citigroup i.e., Citigroup and Edgewood Growth go up and down completely randomly.
Pair Corralation between Citigroup and Edgewood Growth
Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Edgewood Growth. In addition to that, Citigroup is 1.71 times more volatile than Edgewood Growth Fund. It trades about -0.33 of its total potential returns per unit of risk. Edgewood Growth Fund is currently generating about -0.29 per unit of volatility. If you would invest 4,137 in Edgewood Growth Fund on December 9, 2024 and sell it today you would lose (295.00) from holding Edgewood Growth Fund or give up 7.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Edgewood Growth Fund
Performance |
| Timeline |
| Citigroup |
| Edgewood Growth |
Citigroup and Edgewood Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Edgewood Growth
The main advantage of trading using opposite Citigroup and Edgewood Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Edgewood Growth 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 Edgewood Growth will offset losses from the drop in Edgewood Growth's long position.| Citigroup vs. JPMorgan Chase Co | ||
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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