Correlation Between Citigroup and Needham Growth
Can any of the company-specific risk be diversified away by investing in both Citigroup and Needham Growth 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 Needham Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Needham Growth, you can compare the effects of market volatilities on Citigroup and Needham Growth 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 Needham Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Needham Growth.
Diversification Opportunities for Citigroup and Needham Growth
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Needham is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Needham Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Growth 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 Needham Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Growth has no effect on the direction of Citigroup i.e., Citigroup and Needham Growth go up and down completely randomly.
Pair Corralation between Citigroup and Needham Growth
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.06 times more return on investment than Needham Growth. However, Citigroup is 1.06 times more volatile than Needham Growth. It trades about 0.21 of its potential returns per unit of risk. Needham Growth is currently generating about -0.14 per unit of risk. If you would invest 6,412 in Citigroup on August 30, 2024 and sell it today you would earn a total of 604.00 from holding Citigroup or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Needham Growth
Performance |
| Timeline |
| Citigroup |
| Needham Growth |
Citigroup and Needham Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Needham Growth
The main advantage of trading using opposite Citigroup and Needham Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Needham Growth 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 Needham Growth will offset losses from the drop in Needham Growth's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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