Correlation Between Citigroup and Financial
Can any of the company-specific risk be diversified away by investing in both Citigroup and Financial 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 Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Financial 15 Split, you can compare the effects of market volatilities on Citigroup and Financial 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 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Financial.
Diversification Opportunities for Citigroup and Financial
Poor diversification
The 3 months correlation between Citigroup and Financial is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split 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 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Citigroup i.e., Citigroup and Financial go up and down completely randomly.
Pair Corralation between Citigroup and Financial
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.55 times less return on investment than Financial. But when comparing it to its historical volatility, Citigroup is 1.8 times less risky than Financial. It trades about 0.12 of its potential returns per unit of risk. Financial 15 Split is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 471.00 in Financial 15 Split on August 26, 2024 and sell it today you would earn a total of 236.00 from holding Financial 15 Split or generate 50.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 63.05% |
| Values | Daily Returns |
Citigroup vs. Financial 15 Split
Performance |
| Timeline |
| Citigroup |
| Financial 15 Split |
Citigroup and Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Financial
The main advantage of trading using opposite Citigroup and Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Financial 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 Financial will offset losses from the drop in Financial's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Financial vs. Invesco High Income | Financial vs. Blackrock Muniholdings Ny | Financial vs. MFS Investment Grade | Financial vs. Federated Premier Municipal |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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