Correlation Between Citigroup and Red River
Can any of the company-specific risk be diversified away by investing in both Citigroup and Red River 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 Red River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Red River Bancshares, you can compare the effects of market volatilities on Citigroup and Red River 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 Red River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Red River.
Diversification Opportunities for Citigroup and Red River
Very poor diversification
The 3 months correlation between Citigroup and Red is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Red River Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red River Bancshares 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 Red River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red River Bancshares has no effect on the direction of Citigroup i.e., Citigroup and Red River go up and down completely randomly.
Pair Corralation between Citigroup and Red River
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.29 times less return on investment than Red River. In addition to that, Citigroup is 1.1 times more volatile than Red River Bancshares. It trades about 0.21 of its total potential returns per unit of risk. Red River Bancshares is currently generating about 0.29 per unit of volatility. If you would invest 5,171 in Red River Bancshares on August 24, 2024 and sell it today you would earn a total of 703.00 from holding Red River Bancshares or generate 13.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Red River Bancshares
Performance |
| Timeline |
| Citigroup |
| Red River Bancshares |
Citigroup and Red River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Red River
The main advantage of trading using opposite Citigroup and Red River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Red River 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 Red River will offset losses from the drop in Red River's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Red River vs. Home Federal Bancorp | Red River vs. Magyar Bancorp | Red River vs. Community West Bancshares | Red River vs. Rhinebeck Bancorp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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