Correlation Between Citigroup and Payden Absolute
Can any of the company-specific risk be diversified away by investing in both Citigroup and Payden Absolute 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 Payden Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Payden Absolute Return, you can compare the effects of market volatilities on Citigroup and Payden Absolute 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 Payden Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Payden Absolute.
Diversification Opportunities for Citigroup and Payden Absolute
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Payden is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Payden Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Absolute Return 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 Payden Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Absolute Return has no effect on the direction of Citigroup i.e., Citigroup and Payden Absolute go up and down completely randomly.
Pair Corralation between Citigroup and Payden Absolute
Taking into account the 90-day investment horizon Citigroup is expected to generate 17.61 times more return on investment than Payden Absolute. However, Citigroup is 17.61 times more volatile than Payden Absolute Return. It trades about 0.07 of its potential returns per unit of risk. Payden Absolute Return is currently generating about 0.15 per unit of risk. If you would invest 6,079 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,008 from holding Citigroup or generate 16.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Payden Absolute Return
Performance |
| Timeline |
| Citigroup |
| Payden Absolute Return |
Citigroup and Payden Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Payden Absolute
The main advantage of trading using opposite Citigroup and Payden Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Payden Absolute 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 Payden Absolute will offset losses from the drop in Payden Absolute's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Payden Absolute vs. Vanguard Total Stock | Payden Absolute vs. Vanguard 500 Index | Payden Absolute vs. Vanguard Total Stock | Payden Absolute vs. Vanguard Total Stock |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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