Correlation Between Citigroup and Midcap Fund
Can any of the company-specific risk be diversified away by investing in both Citigroup and Midcap Fund 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 Midcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Midcap Fund Class, you can compare the effects of market volatilities on Citigroup and Midcap Fund 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 Midcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Midcap Fund.
Diversification Opportunities for Citigroup and Midcap Fund
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Midcap is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Midcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund Class 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 Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund Class has no effect on the direction of Citigroup i.e., Citigroup and Midcap Fund go up and down completely randomly.
Pair Corralation between Citigroup and Midcap Fund
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.03 times more return on investment than Midcap Fund. However, Citigroup is 2.03 times more volatile than Midcap Fund Class. It trades about 0.25 of its potential returns per unit of risk. Midcap Fund Class is currently generating about 0.32 per unit of risk. If you would invest 6,360 in Citigroup on August 28, 2024 and sell it today you would earn a total of 715.00 from holding Citigroup or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Midcap Fund Class
Performance |
| Timeline |
| Citigroup |
| Midcap Fund Class |
Citigroup and Midcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Midcap Fund
The main advantage of trading using opposite Citigroup and Midcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Midcap Fund 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 Midcap Fund will offset losses from the drop in Midcap Fund's long position.The idea behind Citigroup and Midcap Fund Class pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Midcap Fund vs. Us Government Securities | Midcap Fund vs. Dws Government Money | Midcap Fund vs. Us Government Securities | Midcap Fund vs. Vanguard Short Term Government |
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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