Correlation Between Citigroup and Magellan Financial
Can any of the company-specific risk be diversified away by investing in both Citigroup and Magellan Financial 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 Magellan Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Magellan Financial Group, you can compare the effects of market volatilities on Citigroup and Magellan Financial 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 Magellan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Magellan Financial.
Diversification Opportunities for Citigroup and Magellan Financial
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Magellan is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Magellan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Financial 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 Magellan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Financial has no effect on the direction of Citigroup i.e., Citigroup and Magellan Financial go up and down completely randomly.
Pair Corralation between Citigroup and Magellan Financial
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.78 times more return on investment than Magellan Financial. However, Citigroup is 1.29 times less risky than Magellan Financial. It trades about 0.14 of its potential returns per unit of risk. Magellan Financial Group is currently generating about 0.09 per unit of risk. If you would invest 4,346 in Citigroup on October 21, 2024 and sell it today you would earn a total of 3,653 from holding Citigroup or generate 84.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.31% |
| Values | Daily Returns |
Citigroup vs. Magellan Financial Group
Performance |
| Timeline |
| Citigroup |
| Magellan Financial |
Citigroup and Magellan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Magellan Financial
The main advantage of trading using opposite Citigroup and Magellan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Magellan Financial 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 Magellan Financial will offset losses from the drop in Magellan Financial's long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
| Magellan Financial vs. Pinnacle Investment Management | Magellan Financial vs. Saferoads Holdings | Magellan Financial vs. Auctus Alternative Investments | Magellan Financial vs. Super Retail Group |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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