Correlation Between Citigroup and Redwood Alphafactor
Can any of the company-specific risk be diversified away by investing in both Citigroup and Redwood Alphafactor 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 Redwood Alphafactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Redwood Alphafactor Tactical, you can compare the effects of market volatilities on Citigroup and Redwood Alphafactor 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 Redwood Alphafactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Redwood Alphafactor.
Diversification Opportunities for Citigroup and Redwood Alphafactor
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Redwood is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Redwood Alphafactor Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Alphafactor 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 Redwood Alphafactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Alphafactor has no effect on the direction of Citigroup i.e., Citigroup and Redwood Alphafactor go up and down completely randomly.
Pair Corralation between Citigroup and Redwood Alphafactor
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.31 times more return on investment than Redwood Alphafactor. However, Citigroup is 2.31 times more volatile than Redwood Alphafactor Tactical. It trades about 0.07 of its potential returns per unit of risk. Redwood Alphafactor Tactical is currently generating about 0.03 per unit of risk. If you would invest 4,206 in Citigroup on August 26, 2024 and sell it today you would earn a total of 2,778 from holding Citigroup or generate 66.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Redwood Alphafactor Tactical
Performance |
| Timeline |
| Citigroup |
| Redwood Alphafactor |
Citigroup and Redwood Alphafactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Redwood Alphafactor
The main advantage of trading using opposite Citigroup and Redwood Alphafactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Redwood Alphafactor 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 Redwood Alphafactor will offset losses from the drop in Redwood Alphafactor's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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