Correlation Between Citigroup and American Funds
Can any of the company-specific risk be diversified away by investing in both Citigroup and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and American Funds Income, you can compare the effects of market volatilities on Citigroup and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and American Funds.
Diversification Opportunities for Citigroup and American Funds
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and American is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and American Funds Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Income 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Income has no effect on the direction of Citigroup i.e., Citigroup and American Funds go up and down completely randomly.
Pair Corralation between Citigroup and American Funds
Taking into account the 90-day investment horizon Citigroup is expected to generate 4.26 times more return on investment than American Funds. However, Citigroup is 4.26 times more volatile than American Funds Income. It trades about 0.08 of its potential returns per unit of risk. American Funds Income is currently generating about 0.11 per unit of risk. If you would invest 4,054 in Citigroup on September 12, 2024 and sell it today you would earn a total of 3,196 from holding Citigroup or generate 78.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Citigroup vs. American Funds Income
Performance |
| Timeline |
| Citigroup |
| American Funds Income |
Citigroup and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and American Funds
The main advantage of trading using opposite Citigroup and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| American Funds vs. Guidemark Smallmid Cap | American Funds vs. Pace Smallmedium Value | American Funds vs. Kinetics Small Cap | American Funds vs. Mutual Of America |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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