Correlation Between Citigroup and Home Federal
Can any of the company-specific risk be diversified away by investing in both Citigroup and Home Federal 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 Home Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Home Federal Bancorp, you can compare the effects of market volatilities on Citigroup and Home Federal 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 Home Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Home Federal.
Diversification Opportunities for Citigroup and Home Federal
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and Home is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Home Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Federal Bancorp 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 Home Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Federal Bancorp has no effect on the direction of Citigroup i.e., Citigroup and Home Federal go up and down completely randomly.
Pair Corralation between Citigroup and Home Federal
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.81 times more return on investment than Home Federal. However, Citigroup is 1.24 times less risky than Home Federal. It trades about 0.23 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about -0.02 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 | 90.48% |
| Values | Daily Returns |
Citigroup vs. Home Federal Bancorp
Performance |
| Timeline |
| Citigroup |
| Home Federal Bancorp |
Citigroup and Home Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Home Federal
The main advantage of trading using opposite Citigroup and Home Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Home Federal 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 Home Federal will offset losses from the drop in Home Federal's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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