Correlation Between Citigroup and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Citigroup and Regional Bank 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 Regional Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Regional Bank Fund, you can compare the effects of market volatilities on Citigroup and Regional Bank 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 Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Regional Bank.
Diversification Opportunities for Citigroup and Regional Bank
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Regional is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank 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 Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Citigroup i.e., Citigroup and Regional Bank go up and down completely randomly.
Pair Corralation between Citigroup and Regional Bank
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.09 times more return on investment than Regional Bank. However, Citigroup is 1.09 times more volatile than Regional Bank Fund. It trades about 0.15 of its potential returns per unit of risk. Regional Bank Fund is currently generating about -0.18 per unit of risk. If you would invest 6,968 in Citigroup on November 27, 2024 and sell it today you would earn a total of 997.00 from holding Citigroup or generate 14.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Regional Bank Fund
Performance |
| Timeline |
| Citigroup |
| Regional Bank |
Citigroup and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Regional Bank
The main advantage of trading using opposite Citigroup and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Regional Bank vs. Pace High Yield | Regional Bank vs. Buffalo High Yield | Regional Bank vs. Buffalo High Yield | Regional Bank vs. Neuberger Berman Income |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |