Correlation Between Citigroup and Hartford Municipal
Can any of the company-specific risk be diversified away by investing in both Citigroup and Hartford Municipal 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 Hartford Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and The Hartford Municipal, you can compare the effects of market volatilities on Citigroup and Hartford Municipal 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 Hartford Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Hartford Municipal.
Diversification Opportunities for Citigroup and Hartford Municipal
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Hartford is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and The Hartford Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Municipal 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 Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Municipal has no effect on the direction of Citigroup i.e., Citigroup and Hartford Municipal go up and down completely randomly.
Pair Corralation between Citigroup and Hartford Municipal
Taking into account the 90-day investment horizon Citigroup is expected to generate 10.91 times more return on investment than Hartford Municipal. However, Citigroup is 10.91 times more volatile than The Hartford Municipal. It trades about 0.13 of its potential returns per unit of risk. The Hartford Municipal is currently generating about 0.05 per unit of risk. If you would invest 6,092 in Citigroup on September 2, 2024 and sell it today you would earn a total of 995.00 from holding Citigroup or generate 16.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. The Hartford Municipal
Performance |
| Timeline |
| Citigroup |
| The Hartford Municipal |
Citigroup and Hartford Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Hartford Municipal
The main advantage of trading using opposite Citigroup and Hartford Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Hartford Municipal 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 Hartford Municipal will offset losses from the drop in Hartford Municipal's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Hartford Municipal vs. The Hartford Growth | Hartford Municipal vs. The Hartford Growth | Hartford Municipal vs. The Hartford Growth | Hartford Municipal vs. The Hartford Growth |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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