Correlation Between Citigroup and Prudential Day
Can any of the company-specific risk be diversified away by investing in both Citigroup and Prudential Day 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 Prudential Day into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Prudential Day One, you can compare the effects of market volatilities on Citigroup and Prudential Day 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 Prudential Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Prudential Day.
Diversification Opportunities for Citigroup and Prudential Day
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Citigroup and Prudential is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Prudential Day One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Day One 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 Prudential Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Day One has no effect on the direction of Citigroup i.e., Citigroup and Prudential Day go up and down completely randomly.
Pair Corralation between Citigroup and Prudential Day
Taking into account the 90-day investment horizon Citigroup is expected to generate 7.23 times more return on investment than Prudential Day. However, Citigroup is 7.23 times more volatile than Prudential Day One. It trades about 0.33 of its potential returns per unit of risk. Prudential Day One is currently generating about 0.32 per unit of risk. If you would invest 6,235 in Citigroup on September 4, 2024 and sell it today you would earn a total of 904.00 from holding Citigroup or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Prudential Day One
Performance |
| Timeline |
| Citigroup |
| Prudential Day One |
Citigroup and Prudential Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Prudential Day
The main advantage of trading using opposite Citigroup and Prudential Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Prudential Day 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 Prudential Day will offset losses from the drop in Prudential Day's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Prudential Day vs. Ultra Short Fixed Income | Prudential Day vs. Multimedia Portfolio Multimedia | Prudential Day vs. The Fixed Income | Prudential Day vs. Sarofim Equity |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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