Correlation Between Citigroup and Progressive Corp
Can any of the company-specific risk be diversified away by investing in both Citigroup and Progressive Corp 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 Progressive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Progressive Corp, you can compare the effects of market volatilities on Citigroup and Progressive Corp 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 Progressive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Progressive Corp.
Diversification Opportunities for Citigroup and Progressive Corp
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Progressive is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp 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 Progressive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive Corp has no effect on the direction of Citigroup i.e., Citigroup and Progressive Corp go up and down completely randomly.
Pair Corralation between Citigroup and Progressive Corp
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.25 times more return on investment than Progressive Corp. However, Citigroup is 1.25 times more volatile than Progressive Corp. It trades about 0.25 of its potential returns per unit of risk. Progressive Corp is currently generating about 0.26 per unit of risk. If you would invest 6,360 in Citigroup on August 27, 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Progressive Corp
Performance |
| Timeline |
| Citigroup |
| Progressive Corp |
Citigroup and Progressive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Progressive Corp
The main advantage of trading using opposite Citigroup and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Progressive Corp 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 Progressive Corp will offset losses from the drop in Progressive Corp's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| Progressive Corp vs. Strategic Education | Progressive Corp vs. LPKF Laser Electronics | Progressive Corp vs. CHINA EDUCATION GROUP | Progressive Corp vs. Methode Electronics |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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