Correlation Between Citigroup and Granite Point
Can any of the company-specific risk be diversified away by investing in both Citigroup and Granite Point 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 Granite Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Granite Point Mortgage, you can compare the effects of market volatilities on Citigroup and Granite Point 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 Granite Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Granite Point.
Diversification Opportunities for Citigroup and Granite Point
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Granite is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Granite Point Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Point Mortgage 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 Granite Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Point Mortgage has no effect on the direction of Citigroup i.e., Citigroup and Granite Point go up and down completely randomly.
Pair Corralation between Citigroup and Granite Point
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.83 times more return on investment than Granite Point. However, Citigroup is 1.83 times more volatile than Granite Point Mortgage. It trades about 0.21 of its potential returns per unit of risk. Granite Point Mortgage is currently generating about 0.26 per unit of risk. If you would invest 6,393 in Citigroup on August 31, 2024 and sell it today you would earn a total of 623.00 from holding Citigroup or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Granite Point Mortgage
Performance |
| Timeline |
| Citigroup |
| Granite Point Mortgage |
Citigroup and Granite Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Granite Point
The main advantage of trading using opposite Citigroup and Granite Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Granite Point 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 Granite Point will offset losses from the drop in Granite Point's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Granite Point vs. Rithm Capital Corp | Granite Point vs. PennyMac Mortgage Investment | Granite Point vs. AGNC Investment Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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