Correlation Between Citigroup and Pax Small
Can any of the company-specific risk be diversified away by investing in both Citigroup and Pax Small 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 Pax Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Pax Small Cap, you can compare the effects of market volatilities on Citigroup and Pax Small 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 Pax Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Pax Small.
Diversification Opportunities for Citigroup and Pax Small
Almost no diversification
The 3 months correlation between Citigroup and Pax is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pax Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Small Cap 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 Pax Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Small Cap has no effect on the direction of Citigroup i.e., Citigroup and Pax Small go up and down completely randomly.
Pair Corralation between Citigroup and Pax Small
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.53 times more return on investment than Pax Small. However, Citigroup is 1.53 times more volatile than Pax Small Cap. It trades about 0.06 of its potential returns per unit of risk. Pax Small Cap is currently generating about 0.05 per unit of risk. If you would invest 4,651 in Citigroup on September 1, 2024 and sell it today you would earn a total of 2,436 from holding Citigroup or generate 52.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
Citigroup vs. Pax Small Cap
Performance |
| Timeline |
| Citigroup |
| Pax Small Cap |
Citigroup and Pax Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Pax Small
The main advantage of trading using opposite Citigroup and Pax Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Pax Small 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 Pax Small will offset losses from the drop in Pax Small's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Pax Small vs. Pgim Jennison Diversified | Pax Small vs. Lord Abbett Diversified | Pax Small vs. The Gabelli Small | Pax Small vs. Tax Managed Mid Small |
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 CEOs Directory module to screen CEOs from public companies around the world.
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