Correlation Between Citigroup and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both Citigroup and Franklin FTSE 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 Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Franklin FTSE South, you can compare the effects of market volatilities on Citigroup and Franklin FTSE 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 Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Franklin FTSE.
Diversification Opportunities for Citigroup and Franklin FTSE
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Franklin is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Franklin FTSE South in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE South 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 Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE South has no effect on the direction of Citigroup i.e., Citigroup and Franklin FTSE go up and down completely randomly.
Pair Corralation between Citigroup and Franklin FTSE
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.31 times more return on investment than Franklin FTSE. However, Citigroup is 1.31 times more volatile than Franklin FTSE South. It trades about 0.13 of its potential returns per unit of risk. Franklin FTSE South is currently generating about -0.1 per unit of risk. If you would invest 6,104 in Citigroup on August 28, 2024 and sell it today you would earn a total of 971.00 from holding Citigroup or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Franklin FTSE South
Performance |
| Timeline |
| Citigroup |
| Franklin FTSE South |
Citigroup and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Franklin FTSE
The main advantage of trading using opposite Citigroup and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Franklin FTSE 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 Franklin FTSE will offset losses from the drop in Franklin FTSE's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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