Correlation Between Citigroup and ProAssurance
Can any of the company-specific risk be diversified away by investing in both Citigroup and ProAssurance 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 ProAssurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and ProAssurance, you can compare the effects of market volatilities on Citigroup and ProAssurance 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 ProAssurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and ProAssurance.
Diversification Opportunities for Citigroup and ProAssurance
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and ProAssurance is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ProAssurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProAssurance 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 ProAssurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProAssurance has no effect on the direction of Citigroup i.e., Citigroup and ProAssurance go up and down completely randomly.
Pair Corralation between Citigroup and ProAssurance
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.62 times more return on investment than ProAssurance. However, Citigroup is 1.62 times less risky than ProAssurance. It trades about 0.07 of its potential returns per unit of risk. ProAssurance is currently generating about -0.01 per unit of risk. If you would invest 4,746 in Citigroup on November 2, 2024 and sell it today you would earn a total of 3,397 from holding Citigroup or generate 71.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. ProAssurance
Performance |
| Timeline |
| Citigroup |
| ProAssurance |
Citigroup and ProAssurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and ProAssurance
The main advantage of trading using opposite Citigroup and ProAssurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, ProAssurance 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 ProAssurance will offset losses from the drop in ProAssurance's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| ProAssurance vs. Argo Group International | ProAssurance vs. Horace Mann Educators | ProAssurance vs. Kemper | ProAssurance vs. Selective Insurance Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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