Correlation Between Citigroup and Small Company
Can any of the company-specific risk be diversified away by investing in both Citigroup and Small Company 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 Small Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Small Pany Fund, you can compare the effects of market volatilities on Citigroup and Small Company 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 Small Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Small Company.
Diversification Opportunities for Citigroup and Small Company
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Small is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Small Pany Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Fund 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 Small Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Fund has no effect on the direction of Citigroup i.e., Citigroup and Small Company go up and down completely randomly.
Pair Corralation between Citigroup and Small Company
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.24 times more return on investment than Small Company. However, Citigroup is 1.24 times more volatile than Small Pany Fund. It trades about 0.21 of its potential returns per unit of risk. Small Pany Fund is currently generating about 0.18 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Small Pany Fund
Performance |
| Timeline |
| Citigroup |
| Small Pany Fund |
Citigroup and Small Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Small Company
The main advantage of trading using opposite Citigroup and Small Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Small Company 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 Small Company will offset losses from the drop in Small Company's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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