Correlation Between Citigroup and Graham
Can any of the company-specific risk be diversified away by investing in both Citigroup and Graham 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 Graham into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Graham, you can compare the effects of market volatilities on Citigroup and Graham 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 Graham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Graham.
Diversification Opportunities for Citigroup and Graham
Very poor diversification
The 3 months correlation between Citigroup and Graham is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Graham in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham 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 Graham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham has no effect on the direction of Citigroup i.e., Citigroup and Graham go up and down completely randomly.
Pair Corralation between Citigroup and Graham
Taking into account the 90-day investment horizon Citigroup is expected to generate 4.93 times less return on investment than Graham. But when comparing it to its historical volatility, Citigroup is 2.3 times less risky than Graham. It trades about 0.2 of its potential returns per unit of risk. Graham is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 2,878 in Graham on August 30, 2024 and sell it today you would earn a total of 1,504 from holding Graham or generate 52.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Citigroup vs. Graham
Performance |
| Timeline |
| Citigroup |
| Graham |
Citigroup and Graham Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Graham
The main advantage of trading using opposite Citigroup and Graham positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Graham 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 Graham will offset losses from the drop in Graham's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Graham vs. Luxfer Holdings PLC | Graham vs. Enerpac Tool Group | Graham vs. Kadant Inc | Graham vs. Omega Flex |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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