Correlation Between Citigroup and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Citigroup and Wells Fargo 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 Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Wells Fargo Growth, you can compare the effects of market volatilities on Citigroup and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Wells Fargo.
Diversification Opportunities for Citigroup and Wells Fargo
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and WELLS is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Wells Fargo Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Growth 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Growth has no effect on the direction of Citigroup i.e., Citigroup and Wells Fargo go up and down completely randomly.
Pair Corralation between Citigroup and Wells Fargo
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.88 times more return on investment than Wells Fargo. However, Citigroup is 1.88 times more volatile than Wells Fargo Growth. It trades about 0.29 of its potential returns per unit of risk. Wells Fargo Growth is currently generating about 0.16 per unit of risk. If you would invest 6,122 in Citigroup on August 26, 2024 and sell it today you would earn a total of 862.00 from holding Citigroup or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Wells Fargo Growth
Performance |
| Timeline |
| Citigroup |
| Wells Fargo Growth |
Citigroup and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Wells Fargo
The main advantage of trading using opposite Citigroup and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Wells Fargo vs. Jpmorgan Mid Cap | Wells Fargo vs. Jpmorgan International Value | Wells Fargo vs. Jpmorgan Small Cap | Wells Fargo vs. Wells Fargo Discovery |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |