Correlation Between Citigroup and Optimum Small-mid
Can any of the company-specific risk be diversified away by investing in both Citigroup and Optimum Small-mid 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 Optimum Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Optimum Small Mid Cap, you can compare the effects of market volatilities on Citigroup and Optimum Small-mid 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 Optimum Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Optimum Small-mid.
Diversification Opportunities for Citigroup and Optimum Small-mid
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Optimum is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Optimum Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Small Mid 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 Optimum Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Small Mid has no effect on the direction of Citigroup i.e., Citigroup and Optimum Small-mid go up and down completely randomly.
Pair Corralation between Citigroup and Optimum Small-mid
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.51 times more return on investment than Optimum Small-mid. However, Citigroup is 1.51 times more volatile than Optimum Small Mid Cap. It trades about 0.08 of its potential returns per unit of risk. Optimum Small Mid Cap is currently generating about 0.07 per unit of risk. If you would invest 4,544 in Citigroup on September 1, 2024 and sell it today you would earn a total of 2,543 from holding Citigroup or generate 55.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Citigroup vs. Optimum Small Mid Cap
Performance |
| Timeline |
| Citigroup |
| Optimum Small Mid |
Citigroup and Optimum Small-mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Optimum Small-mid
The main advantage of trading using opposite Citigroup and Optimum Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Optimum Small-mid 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 Optimum Small-mid will offset losses from the drop in Optimum Small-mid'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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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