Correlation Between Citigroup and Simmons First
Can any of the company-specific risk be diversified away by investing in both Citigroup and Simmons First 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 Simmons First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Simmons First National, you can compare the effects of market volatilities on Citigroup and Simmons First 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 Simmons First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Simmons First.
Diversification Opportunities for Citigroup and Simmons First
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Simmons is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Simmons First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simmons First National 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 Simmons First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simmons First National has no effect on the direction of Citigroup i.e., Citigroup and Simmons First go up and down completely randomly.
Pair Corralation between Citigroup and Simmons First
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.15 times less return on investment than Simmons First. But when comparing it to its historical volatility, Citigroup is 1.16 times less risky than Simmons First. It trades about 0.08 of its potential returns per unit of risk. Simmons First National is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,837 in Simmons First National on August 28, 2024 and sell it today you would earn a total of 649.00 from holding Simmons First National or generate 35.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Simmons First National
Performance |
| Timeline |
| Citigroup |
| Simmons First National |
Citigroup and Simmons First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Simmons First
The main advantage of trading using opposite Citigroup and Simmons First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Simmons First 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 Simmons First will offset losses from the drop in Simmons First's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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