Correlation Between Citigroup and Federated Bond
Can any of the company-specific risk be diversified away by investing in both Citigroup and Federated Bond 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 Federated Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Federated Bond Fund, you can compare the effects of market volatilities on Citigroup and Federated Bond 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 Federated Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Federated Bond.
Diversification Opportunities for Citigroup and Federated Bond
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Federated is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Federated Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Bond 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 Federated Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Bond has no effect on the direction of Citigroup i.e., Citigroup and Federated Bond go up and down completely randomly.
Pair Corralation between Citigroup and Federated Bond
Taking into account the 90-day investment horizon Citigroup is expected to generate 6.82 times more return on investment than Federated Bond. However, Citigroup is 6.82 times more volatile than Federated Bond Fund. It trades about 0.2 of its potential returns per unit of risk. Federated Bond Fund is currently generating about -0.05 per unit of risk. If you would invest 5,683 in Citigroup on September 12, 2024 and sell it today you would earn a total of 1,513 from holding Citigroup or generate 26.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Federated Bond Fund
Performance |
| Timeline |
| Citigroup |
| Federated Bond |
Citigroup and Federated Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Federated Bond
The main advantage of trading using opposite Citigroup and Federated Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Federated Bond 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 Federated Bond will offset losses from the drop in Federated Bond's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Federated Bond vs. California High Yield Municipal | Federated Bond vs. Counterpoint Tactical Municipal | Federated Bond vs. Old Westbury Municipal | Federated Bond vs. Nuveen Minnesota Municipal |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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