Correlation Between Citigroup and Needham Small
Can any of the company-specific risk be diversified away by investing in both Citigroup and Needham Small 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 Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Needham Small Cap, you can compare the effects of market volatilities on Citigroup and Needham Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Needham Small.
Diversification Opportunities for Citigroup and Needham Small
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Needham is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Needham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Small Cap has no effect on the direction of Citigroup i.e., Citigroup and Needham Small go up and down completely randomly.
Pair Corralation between Citigroup and Needham Small
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.98 times more return on investment than Needham Small. However, Citigroup is 1.02 times less risky than Needham Small. It trades about 0.06 of its potential returns per unit of risk. Needham Small Cap is currently generating about 0.06 per unit of risk. If you would invest 6,008 in Citigroup on September 3, 2024 and sell it today you would earn a total of 1,079 from holding Citigroup or generate 17.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Needham Small Cap
Performance |
| Timeline |
| Citigroup |
| Needham Small Cap |
Citigroup and Needham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Needham Small
The main advantage of trading using opposite Citigroup and Needham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Needham Small 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 Small will offset losses from the drop in Needham Small's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Needham Small vs. The Hartford Midcap | Needham Small vs. Mfs Emerging Markets | Needham Small vs. Wells Fargo Special | Needham Small vs. Washington Mutual Investors |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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