Correlation Between Citigroup and First Investors
Can any of the company-specific risk be diversified away by investing in both Citigroup and First Investors 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 Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and First Investors Select, you can compare the effects of market volatilities on Citigroup and First Investors 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 Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and First Investors.
Diversification Opportunities for Citigroup and First Investors
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of Citigroup i.e., Citigroup and First Investors go up and down completely randomly.
Pair Corralation between Citigroup and First Investors
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.0 times more return on investment than First Investors. However, Citigroup is 2.0 times more volatile than First Investors Select. It trades about 0.09 of its potential returns per unit of risk. First Investors Select is currently generating about 0.1 per unit of risk. If you would invest 5,476 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,611 from holding Citigroup or generate 29.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. First Investors Select
Performance |
| Timeline |
| Citigroup |
| First Investors Select |
Citigroup and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and First Investors
The main advantage of trading using opposite Citigroup and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, First Investors 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 Investors will offset losses from the drop in First Investors' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| First Investors vs. Old Westbury Large | First Investors vs. Qs Large Cap | First Investors vs. Morningstar Unconstrained Allocation | First Investors vs. Principal Lifetime Hybrid |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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