Correlation Between Citigroup and Trowe Price
Can any of the company-specific risk be diversified away by investing in both Citigroup and Trowe Price 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 Trowe Price into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Trowe Price Retirement, you can compare the effects of market volatilities on Citigroup and Trowe Price 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 Trowe Price. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Trowe Price.
Diversification Opportunities for Citigroup and Trowe Price
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citigroup and Trowe is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Trowe Price Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trowe Price Retirement 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 Trowe Price. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trowe Price Retirement has no effect on the direction of Citigroup i.e., Citigroup and Trowe Price go up and down completely randomly.
Pair Corralation between Citigroup and Trowe Price
Taking into account the 90-day investment horizon Citigroup is expected to generate 4.15 times more return on investment than Trowe Price. However, Citigroup is 4.15 times more volatile than Trowe Price Retirement. It trades about 0.11 of its potential returns per unit of risk. Trowe Price Retirement is currently generating about 0.14 per unit of risk. If you would invest 4,567 in Citigroup on August 29, 2024 and sell it today you would earn a total of 2,408 from holding Citigroup or generate 52.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Trowe Price Retirement
Performance |
| Timeline |
| Citigroup |
| Trowe Price Retirement |
Citigroup and Trowe Price Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Trowe Price
The main advantage of trading using opposite Citigroup and Trowe Price positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Trowe Price 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 Trowe Price will offset losses from the drop in Trowe Price's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Trowe Price vs. T Rowe Price | Trowe Price vs. T Rowe Price | Trowe Price vs. T Rowe Price | Trowe Price vs. T Rowe Price |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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