Correlation Between Citigroup and Guardian
Can any of the company-specific risk be diversified away by investing in both Citigroup and Guardian 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 Guardian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Guardian i3 Global, you can compare the effects of market volatilities on Citigroup and Guardian 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 Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Guardian.
Diversification Opportunities for Citigroup and Guardian
Very poor diversification
The 3 months correlation between Citigroup and Guardian is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Guardian i3 Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian i3 Global 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 Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian i3 Global has no effect on the direction of Citigroup i.e., Citigroup and Guardian go up and down completely randomly.
Pair Corralation between Citigroup and Guardian
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.04 times less return on investment than Guardian. In addition to that, Citigroup is 1.72 times more volatile than Guardian i3 Global. It trades about 0.07 of its total potential returns per unit of risk. Guardian i3 Global is currently generating about 0.12 per unit of volatility. If you would invest 1,787 in Guardian i3 Global on September 3, 2024 and sell it today you would earn a total of 1,198 from holding Guardian i3 Global or generate 67.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Citigroup vs. Guardian i3 Global
Performance |
| Timeline |
| Citigroup |
| Guardian i3 Global |
Citigroup and Guardian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Guardian
The main advantage of trading using opposite Citigroup and Guardian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Guardian 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 Guardian will offset losses from the drop in Guardian's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Guardian vs. Evolve Global Materials | Guardian vs. Evolve Global Healthcare | Guardian vs. Evolve Banks Enhanced | Guardian vs. Evolve Innovation Index |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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