Correlation Between Citigroup and Largecap Growth
Can any of the company-specific risk be diversified away by investing in both Citigroup and Largecap Growth 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 Largecap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Largecap Growth Fund, you can compare the effects of market volatilities on Citigroup and Largecap Growth 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 Largecap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Largecap Growth.
Diversification Opportunities for Citigroup and Largecap Growth
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Largecap is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Largecap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Largecap Growth 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 Largecap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Largecap Growth has no effect on the direction of Citigroup i.e., Citigroup and Largecap Growth go up and down completely randomly.
Pair Corralation between Citigroup and Largecap Growth
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.89 times more return on investment than Largecap Growth. However, Citigroup is 1.89 times more volatile than Largecap Growth Fund. It trades about 0.25 of its potential returns per unit of risk. Largecap Growth Fund is currently generating about 0.15 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 | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Citigroup vs. Largecap Growth Fund
Performance |
| Timeline |
| Citigroup |
| Largecap Growth |
Citigroup and Largecap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Largecap Growth
The main advantage of trading using opposite Citigroup and Largecap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Largecap Growth 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 Largecap Growth will offset losses from the drop in Largecap Growth's long position.The idea behind Citigroup and Largecap Growth Fund 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.| Largecap Growth vs. Strategic Asset Management | Largecap Growth vs. Strategic Asset Management | Largecap Growth vs. Strategic Asset Management | Largecap Growth 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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