Correlation Between Citigroup and Equity Growth
Can any of the company-specific risk be diversified away by investing in both Citigroup and Equity Growth 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 Equity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Equity Growth Strategy, you can compare the effects of market volatilities on Citigroup and Equity Growth 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 Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Equity Growth.
Diversification Opportunities for Citigroup and Equity Growth
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Equity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Equity Growth Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth Strategy 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 Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth Strategy has no effect on the direction of Citigroup i.e., Citigroup and Equity Growth go up and down completely randomly.
Pair Corralation between Citigroup and Equity Growth
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.25 times more return on investment than Equity Growth. However, Citigroup is 2.25 times more volatile than Equity Growth Strategy. It trades about 0.07 of its potential returns per unit of risk. Equity Growth Strategy is currently generating about 0.08 per unit of risk. If you would invest 4,293 in Citigroup on September 3, 2024 and sell it today you would earn a total of 2,794 from holding Citigroup or generate 65.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Equity Growth Strategy
Performance |
| Timeline |
| Citigroup |
| Equity Growth Strategy |
Citigroup and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Equity Growth
The main advantage of trading using opposite Citigroup and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Equity Growth vs. American Funds The | Equity Growth vs. American Funds The | Equity Growth vs. Income Fund Of | Equity Growth vs. Income Fund Of |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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