Correlation Between Citigroup and Radian
Can any of the company-specific risk be diversified away by investing in both Citigroup and Radian 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 Radian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Radian Group, you can compare the effects of market volatilities on Citigroup and Radian 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 Radian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Radian.
Diversification Opportunities for Citigroup and Radian
Poor diversification
The 3 months correlation between Citigroup and Radian is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Radian Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radian Group 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 Radian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radian Group has no effect on the direction of Citigroup i.e., Citigroup and Radian go up and down completely randomly.
Pair Corralation between Citigroup and Radian
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.98 times more return on investment than Radian. However, Citigroup is 1.02 times less risky than Radian. It trades about 0.12 of its potential returns per unit of risk. Radian Group is currently generating about 0.09 per unit of risk. If you would invest 4,364 in Citigroup on September 14, 2024 and sell it today you would earn a total of 2,737 from holding Citigroup or generate 62.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.18% |
| Values | Daily Returns |
Citigroup vs. Radian Group
Performance |
| Timeline |
| Citigroup |
| Radian Group |
Citigroup and Radian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Radian
The main advantage of trading using opposite Citigroup and Radian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Radian 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 Radian will offset losses from the drop in Radian's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Radian vs. First American Financial | Radian vs. MGIC Investment | Radian vs. Lancashire Holdings Limited | Radian vs. Trisura 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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