Correlation Between Citigroup and Rational Dynamic
Can any of the company-specific risk be diversified away by investing in both Citigroup and Rational Dynamic 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 Rational Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Rational Dynamic Momentum, you can compare the effects of market volatilities on Citigroup and Rational Dynamic 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 Rational Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Rational Dynamic.
Diversification Opportunities for Citigroup and Rational Dynamic
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Rational is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Rational Dynamic Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Dynamic Momentum 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 Rational Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Dynamic Momentum has no effect on the direction of Citigroup i.e., Citigroup and Rational Dynamic go up and down completely randomly.
Pair Corralation between Citigroup and Rational Dynamic
Taking into account the 90-day investment horizon Citigroup is expected to generate 3.05 times more return on investment than Rational Dynamic. However, Citigroup is 3.05 times more volatile than Rational Dynamic Momentum. It trades about 0.1 of its potential returns per unit of risk. Rational Dynamic Momentum is currently generating about 0.06 per unit of risk. If you would invest 4,959 in Citigroup on August 25, 2024 and sell it today you would earn a total of 2,025 from holding Citigroup or generate 40.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Rational Dynamic Momentum
Performance |
| Timeline |
| Citigroup |
| Rational Dynamic Momentum |
Citigroup and Rational Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Rational Dynamic
The main advantage of trading using opposite Citigroup and Rational Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Rational Dynamic 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 Rational Dynamic will offset losses from the drop in Rational Dynamic's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Rational Dynamic vs. Rational Dynamic Momentum | Rational Dynamic vs. Rational Special Situations | Rational Dynamic vs. Rational Special Situations | Rational Dynamic vs. Rational Special Situations |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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