Correlation Between Citigroup and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Citigroup and Lord Abbett 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 Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Lord Abbett Focused, you can compare the effects of market volatilities on Citigroup and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Lord Abbett.
Diversification Opportunities for Citigroup and Lord Abbett
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Lord is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lord Abbett Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Focused 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Focused has no effect on the direction of Citigroup i.e., Citigroup and Lord Abbett go up and down completely randomly.
Pair Corralation between Citigroup and Lord Abbett
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.04 times more return on investment than Lord Abbett. However, Citigroup is 1.04 times more volatile than Lord Abbett Focused. It trades about 0.24 of its potential returns per unit of risk. Lord Abbett Focused is currently generating about -0.13 per unit of risk. If you would invest 6,900 in Citigroup on October 19, 2024 and sell it today you would earn a total of 1,099 from holding Citigroup or generate 15.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Lord Abbett Focused
Performance |
| Timeline |
| Citigroup |
| Lord Abbett Focused |
Citigroup and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Lord Abbett
The main advantage of trading using opposite Citigroup and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett's long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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