Correlation Between Citigroup and American Green
Can any of the company-specific risk be diversified away by investing in both Citigroup and American Green 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 American Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and American Green, you can compare the effects of market volatilities on Citigroup and American Green 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 American Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and American Green.
Diversification Opportunities for Citigroup and American Green
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Citigroup and American is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and American Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Green 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 American Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Green has no effect on the direction of Citigroup i.e., Citigroup and American Green go up and down completely randomly.
Pair Corralation between Citigroup and American Green
Taking into account the 90-day investment horizon Citigroup is expected to generate 16.14 times less return on investment than American Green. But when comparing it to its historical volatility, Citigroup is 17.23 times less risky than American Green. It trades about 0.08 of its potential returns per unit of risk. American Green is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.09 in American Green on August 31, 2024 and sell it today you would lose (0.03) from holding American Green or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. American Green
Performance |
| Timeline |
| Citigroup |
| American Green |
Citigroup and American Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and American Green
The main advantage of trading using opposite Citigroup and American Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, American Green 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 American Green will offset losses from the drop in American Green's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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