Correlation Between Citigroup and American Balanced
Can any of the company-specific risk be diversified away by investing in both Citigroup and American Balanced 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 Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and American Balanced Fund, you can compare the effects of market volatilities on Citigroup and American Balanced 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 Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and American Balanced.
Diversification Opportunities for Citigroup and American Balanced
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and American is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced 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 Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of Citigroup i.e., Citigroup and American Balanced go up and down completely randomly.
Pair Corralation between Citigroup and American Balanced
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.95 times more return on investment than American Balanced. However, Citigroup is 2.95 times more volatile than American Balanced Fund. It trades about 0.41 of its potential returns per unit of risk. American Balanced Fund is currently generating about 0.21 per unit of risk. If you would invest 6,994 in Citigroup on November 3, 2024 and sell it today you would earn a total of 1,149 from holding Citigroup or generate 16.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. American Balanced Fund
Performance |
| Timeline |
| Citigroup |
| American Balanced |
Citigroup and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and American Balanced
The main advantage of trading using opposite Citigroup and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, American Balanced 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 Balanced will offset losses from the drop in American Balanced's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| American Balanced vs. Qs Large Cap | American Balanced vs. Dodge Cox Stock | American Balanced vs. Americafirst Large Cap | American Balanced vs. Ab Large Cap |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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