Correlation Between Citigroup and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both Citigroup and Gladstone Investment 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 Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Gladstone Investment, you can compare the effects of market volatilities on Citigroup and Gladstone Investment 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Gladstone Investment.
Diversification Opportunities for Citigroup and Gladstone Investment
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and Gladstone is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Citigroup i.e., Citigroup and Gladstone Investment go up and down completely randomly.
Pair Corralation between Citigroup and Gladstone Investment
Taking into account the 90-day investment horizon Citigroup is expected to generate 6.38 times more return on investment than Gladstone Investment. However, Citigroup is 6.38 times more volatile than Gladstone Investment. It trades about 0.23 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.03 per unit of risk. If you would invest 6,360 in Citigroup on August 27, 2024 and sell it today you would earn a total of 624.00 from holding Citigroup or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Gladstone Investment
Performance |
| Timeline |
| Citigroup |
| Gladstone Investment |
Citigroup and Gladstone Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Gladstone Investment
The main advantage of trading using opposite Citigroup and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment'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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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