Correlation Between Citigroup and First Horizon
Can any of the company-specific risk be diversified away by investing in both Citigroup and First Horizon 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 First Horizon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and First Horizon, you can compare the effects of market volatilities on Citigroup and First Horizon 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 First Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and First Horizon.
Diversification Opportunities for Citigroup and First Horizon
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and First is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and First Horizon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Horizon 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 First Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Horizon has no effect on the direction of Citigroup i.e., Citigroup and First Horizon go up and down completely randomly.
Pair Corralation between Citigroup and First Horizon
Taking into account the 90-day investment horizon Citigroup is expected to generate 5.25 times more return on investment than First Horizon. However, Citigroup is 5.25 times more volatile than First Horizon. It trades about 0.16 of its potential returns per unit of risk. First Horizon is currently generating about 0.04 per unit of risk. If you would invest 6,083 in Citigroup on August 25, 2024 and sell it today you would earn a total of 901.00 from holding Citigroup or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. First Horizon
Performance |
| Timeline |
| Citigroup |
| First Horizon |
Citigroup and First Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and First Horizon
The main advantage of trading using opposite Citigroup and First Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, First Horizon 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 First Horizon will offset losses from the drop in First Horizon's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| First Horizon vs. Morgan Stanley | First Horizon vs. KeyCorp | First Horizon vs. KeyCorp | First Horizon vs. KeyCorp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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