Correlation Between Citigroup and Principal Midcap
Can any of the company-specific risk be diversified away by investing in both Citigroup and Principal Midcap 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 Principal Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Principal Midcap Value, you can compare the effects of market volatilities on Citigroup and Principal Midcap 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 Principal Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Principal Midcap.
Diversification Opportunities for Citigroup and Principal Midcap
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Principal is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Principal Midcap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Midcap Value 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 Principal Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Midcap Value has no effect on the direction of Citigroup i.e., Citigroup and Principal Midcap go up and down completely randomly.
Pair Corralation between Citigroup and Principal Midcap
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.58 times more return on investment than Principal Midcap. However, Citigroup is 1.58 times more volatile than Principal Midcap Value. It trades about 0.08 of its potential returns per unit of risk. Principal Midcap Value is currently generating about 0.01 per unit of risk. If you would invest 4,492 in Citigroup on November 28, 2024 and sell it today you would earn a total of 3,322 from holding Citigroup or generate 73.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Principal Midcap Value
Performance |
| Timeline |
| Citigroup |
| Principal Midcap Value |
Citigroup and Principal Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Principal Midcap
The main advantage of trading using opposite Citigroup and Principal Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Principal Midcap 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 Principal Midcap will offset losses from the drop in Principal Midcap's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Principal Midcap vs. Strategic Asset Management | Principal Midcap vs. Strategic Asset Management | Principal Midcap vs. Strategic Asset Management | Principal Midcap vs. Strategic Asset Management |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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