Correlation Between Citigroup and Faysal Bank
Can any of the company-specific risk be diversified away by investing in both Citigroup and Faysal Bank 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 Faysal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Faysal Bank, you can compare the effects of market volatilities on Citigroup and Faysal Bank 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 Faysal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Faysal Bank.
Diversification Opportunities for Citigroup and Faysal Bank
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Faysal is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Faysal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faysal Bank 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 Faysal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faysal Bank has no effect on the direction of Citigroup i.e., Citigroup and Faysal Bank go up and down completely randomly.
Pair Corralation between Citigroup and Faysal Bank
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.68 times more return on investment than Faysal Bank. However, Citigroup is 1.47 times less risky than Faysal Bank. It trades about 0.21 of its potential returns per unit of risk. Faysal Bank is currently generating about -0.02 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Faysal Bank
Performance |
| Timeline |
| Citigroup |
| Faysal Bank |
Citigroup and Faysal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Faysal Bank
The main advantage of trading using opposite Citigroup and Faysal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Faysal Bank 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 Faysal Bank will offset losses from the drop in Faysal Bank's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Faysal Bank vs. Masood Textile Mills | Faysal Bank vs. Fauji Foods | Faysal Bank vs. KSB Pumps | Faysal Bank vs. Mari Petroleum |
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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