Correlation Between Citigroup and Rmb Mendon
Can any of the company-specific risk be diversified away by investing in both Citigroup and Rmb Mendon 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 Rmb Mendon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Rmb Mendon Financial, you can compare the effects of market volatilities on Citigroup and Rmb Mendon 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 Rmb Mendon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Rmb Mendon.
Diversification Opportunities for Citigroup and Rmb Mendon
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Rmb is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Rmb Mendon Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmb Mendon Financial 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 Rmb Mendon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmb Mendon Financial has no effect on the direction of Citigroup i.e., Citigroup and Rmb Mendon go up and down completely randomly.
Pair Corralation between Citigroup and Rmb Mendon
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.21 times less return on investment than Rmb Mendon. But when comparing it to its historical volatility, Citigroup is 1.26 times less risky than Rmb Mendon. It trades about 0.21 of its potential returns per unit of risk. Rmb Mendon Financial is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,257 in Rmb Mendon Financial on August 29, 2024 and sell it today you would earn a total of 496.00 from holding Rmb Mendon Financial or generate 11.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Rmb Mendon Financial
Performance |
| Timeline |
| Citigroup |
| Rmb Mendon Financial |
Citigroup and Rmb Mendon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Rmb Mendon
The main advantage of trading using opposite Citigroup and Rmb Mendon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Rmb Mendon 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 Rmb Mendon will offset losses from the drop in Rmb Mendon's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Rmb Mendon vs. Rmb Mendon Financial | Rmb Mendon vs. Hennessy Small Cap | Rmb Mendon vs. Emerald Banking And | Rmb Mendon vs. Ultramid Cap Profund Ultramid 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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