Correlation Between Citigroup and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Citigroup and Merchants Bancorp 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 Merchants Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Merchants Bancorp PR, you can compare the effects of market volatilities on Citigroup and Merchants Bancorp 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 Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Merchants Bancorp.
Diversification Opportunities for Citigroup and Merchants Bancorp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Merchants is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Merchants Bancorp PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants 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 Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Citigroup i.e., Citigroup and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Citigroup and Merchants Bancorp
If you would invest 6,361 in Citigroup on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Citigroup or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Citigroup vs. Merchants Bancorp PR
Performance |
| Timeline |
| Citigroup |
| Merchants Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Citigroup and Merchants Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Merchants Bancorp
The main advantage of trading using opposite Citigroup and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Merchants Bancorp 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 Merchants Bancorp will offset losses from the drop in Merchants Bancorp's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Merchants Bancorp vs. Merchants Bancorp | Merchants Bancorp vs. Valley National Bancorp | Merchants Bancorp vs. Valley National Bancorp | Merchants Bancorp vs. Wintrust Financial 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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