Correlation Between Citigroup and Hodges Small
Can any of the company-specific risk be diversified away by investing in both Citigroup and Hodges Small 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 Hodges Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Hodges Small Cap, you can compare the effects of market volatilities on Citigroup and Hodges Small 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 Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Hodges Small.
Diversification Opportunities for Citigroup and Hodges Small
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Hodges is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hodges Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Small Cap 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 Hodges Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Small Cap has no effect on the direction of Citigroup i.e., Citigroup and Hodges Small go up and down completely randomly.
Pair Corralation between Citigroup and Hodges Small
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.17 times more return on investment than Hodges Small. However, Citigroup is 1.17 times more volatile than Hodges Small Cap. It trades about 0.07 of its potential returns per unit of risk. Hodges Small Cap is currently generating about 0.05 per unit of risk. If you would invest 4,206 in Citigroup on August 24, 2024 and sell it today you would earn a total of 2,778 from holding Citigroup or generate 66.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Hodges Small Cap
Performance |
| Timeline |
| Citigroup |
| Hodges Small Cap |
Citigroup and Hodges Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Hodges Small
The main advantage of trading using opposite Citigroup and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Hodges Small 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 Hodges Small will offset losses from the drop in Hodges Small's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Hodges Small vs. Hodges Fund Retail | Hodges Small vs. Amg Southernsun Small | Hodges Small vs. Brown Advisory Growth | Hodges Small vs. Eventide Gilead Fund |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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