Correlation Between Citigroup and Columbia Income
Can any of the company-specific risk be diversified away by investing in both Citigroup and Columbia Income 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 Columbia Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Columbia Income Builder, you can compare the effects of market volatilities on Citigroup and Columbia Income 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 Columbia Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Columbia Income.
Diversification Opportunities for Citigroup and Columbia Income
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Columbia is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Columbia Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Income Builder 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 Columbia Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Income Builder has no effect on the direction of Citigroup i.e., Citigroup and Columbia Income go up and down completely randomly.
Pair Corralation between Citigroup and Columbia Income
Taking into account the 90-day investment horizon Citigroup is expected to generate 6.5 times more return on investment than Columbia Income. However, Citigroup is 6.5 times more volatile than Columbia Income Builder. It trades about 0.21 of its potential returns per unit of risk. Columbia Income Builder is currently generating about 0.14 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Columbia Income Builder
Performance |
| Timeline |
| Citigroup |
| Columbia Income Builder |
Citigroup and Columbia Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Columbia Income
The main advantage of trading using opposite Citigroup and Columbia Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Columbia Income 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 Columbia Income will offset losses from the drop in Columbia Income's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Columbia Income vs. Pimco High Yield | Columbia Income vs. Gmo High Yield | Columbia Income vs. Pace High Yield | Columbia Income vs. American Century High |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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