Correlation Between Citigroup and Deutsche
Can any of the company-specific risk be diversified away by investing in both Citigroup and Deutsche 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 Deutsche into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Deutsche Sp 500, you can compare the effects of market volatilities on Citigroup and Deutsche 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 Deutsche. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Deutsche.
Diversification Opportunities for Citigroup and Deutsche
Very poor diversification
The 3 months correlation between Citigroup and Deutsche is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Deutsche Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Sp 500 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 Deutsche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Sp 500 has no effect on the direction of Citigroup i.e., Citigroup and Deutsche go up and down completely randomly.
Pair Corralation between Citigroup and Deutsche
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.2 times more return on investment than Deutsche. However, Citigroup is 2.2 times more volatile than Deutsche Sp 500. It trades about 0.09 of its potential returns per unit of risk. Deutsche Sp 500 is currently generating about 0.12 per unit of risk. If you would invest 5,476 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,611 from holding Citigroup or generate 29.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Citigroup vs. Deutsche Sp 500
Performance |
| Timeline |
| Citigroup |
| Deutsche Sp 500 |
Citigroup and Deutsche Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Deutsche
The main advantage of trading using opposite Citigroup and Deutsche positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Deutsche 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 Deutsche will offset losses from the drop in Deutsche's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Deutsche vs. Morningstar Aggressive Growth | Deutsche vs. Needham Aggressive Growth | Deutsche vs. Franklin High Income | Deutsche vs. Legg Mason Partners |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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