Correlation Between Citigroup and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Citigroup and Federated Hermes 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 Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Federated Hermes ETF, you can compare the effects of market volatilities on Citigroup and Federated Hermes 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 Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Federated Hermes.
Diversification Opportunities for Citigroup and Federated Hermes
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Federated is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Federated Hermes ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes ETF 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 Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes ETF has no effect on the direction of Citigroup i.e., Citigroup and Federated Hermes go up and down completely randomly.
Pair Corralation between Citigroup and Federated Hermes
Taking into account the 90-day investment horizon Citigroup is expected to generate 12.74 times more return on investment than Federated Hermes. However, Citigroup is 12.74 times more volatile than Federated Hermes ETF. It trades about 0.26 of its potential returns per unit of risk. Federated Hermes ETF is currently generating about 0.14 per unit of risk. If you would invest 6,361 in Citigroup on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Citigroup or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Federated Hermes ETF
Performance |
| Timeline |
| Citigroup |
| Federated Hermes ETF |
Citigroup and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Federated Hermes
The main advantage of trading using opposite Citigroup and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Federated Hermes vs. Federated Hermes ETF | Federated Hermes vs. American Century ETF | Federated Hermes vs. Dimensional ETF Trust | Federated Hermes vs. Dimensional ETF Trust |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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