Correlation Between Citigroup and Federal National
Can any of the company-specific risk be diversified away by investing in both Citigroup and Federal National 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 Federal National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Federal National Mortgage, you can compare the effects of market volatilities on Citigroup and Federal National 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 Federal National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Federal National.
Diversification Opportunities for Citigroup and Federal National
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Federal is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage 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 Federal National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of Citigroup i.e., Citigroup and Federal National go up and down completely randomly.
Pair Corralation between Citigroup and Federal National
Taking into account the 90-day investment horizon Citigroup is expected to generate 8.33 times less return on investment than Federal National. But when comparing it to its historical volatility, Citigroup is 7.21 times less risky than Federal National. It trades about 0.26 of its potential returns per unit of risk. Federal National Mortgage is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 650.00 in Federal National Mortgage on September 1, 2024 and sell it today you would earn a total of 731.00 from holding Federal National Mortgage or generate 112.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Federal National Mortgage
Performance |
| Timeline |
| Citigroup |
| Federal National Mortgage |
Citigroup and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Federal National
The main advantage of trading using opposite Citigroup and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Federal National 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 Federal National will offset losses from the drop in Federal National's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Federal National vs. Federal National Mortgage | Federal National vs. HUMANA INC | Federal National vs. SCOR PK | Federal National vs. Aquagold International |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |