Correlation Between Citigroup and Payden Corporate
Can any of the company-specific risk be diversified away by investing in both Citigroup and Payden Corporate 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 Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Payden Porate Bond, you can compare the effects of market volatilities on Citigroup and Payden Corporate 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 Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Payden Corporate.
Diversification Opportunities for Citigroup and Payden Corporate
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and PAYDEN is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Payden Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Porate Bond 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 Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Porate Bond has no effect on the direction of Citigroup i.e., Citigroup and Payden Corporate go up and down completely randomly.
Pair Corralation between Citigroup and Payden Corporate
Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Payden Corporate. In addition to that, Citigroup is 5.8 times more volatile than Payden Porate Bond. It trades about -0.02 of its total potential returns per unit of risk. Payden Porate Bond is currently generating about 0.15 per unit of volatility. If you would invest 971.00 in Payden Porate Bond on November 27, 2024 and sell it today you would earn a total of 8.00 from holding Payden Porate Bond or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Payden Porate Bond
Performance |
| Timeline |
| Citigroup |
| Payden Porate Bond |
Citigroup and Payden Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Payden Corporate
The main advantage of trading using opposite Citigroup and Payden Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Payden Corporate 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 Corporate will offset losses from the drop in Payden Corporate's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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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