Correlation Between Citigroup and Purpose Premium
Can any of the company-specific risk be diversified away by investing in both Citigroup and Purpose Premium 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 Purpose Premium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Purpose Premium Yield, you can compare the effects of market volatilities on Citigroup and Purpose Premium 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 Purpose Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Purpose Premium.
Diversification Opportunities for Citigroup and Purpose Premium
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Purpose is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Purpose Premium Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose Premium Yield 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 Purpose Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose Premium Yield has no effect on the direction of Citigroup i.e., Citigroup and Purpose Premium go up and down completely randomly.
Pair Corralation between Citigroup and Purpose Premium
Taking into account the 90-day investment horizon Citigroup is expected to generate 6.94 times more return on investment than Purpose Premium. However, Citigroup is 6.94 times more volatile than Purpose Premium Yield. It trades about 0.07 of its potential returns per unit of risk. Purpose Premium Yield is currently generating about 0.11 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 Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Citigroup vs. Purpose Premium Yield
Performance |
| Timeline |
| Citigroup |
| Purpose Premium Yield |
Citigroup and Purpose Premium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Purpose Premium
The main advantage of trading using opposite Citigroup and Purpose Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Purpose Premium 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 Purpose Premium will offset losses from the drop in Purpose Premium's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Purpose Premium vs. Purpose Core Dividend | Purpose Premium vs. Purpose International Dividend | Purpose Premium vs. Purpose Monthly Income | Purpose Premium vs. BMO Put Write |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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