Correlation Between Citigroup and American Beacon
Can any of the company-specific risk be diversified away by investing in both Citigroup and American Beacon 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 American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and American Beacon Shapiro, you can compare the effects of market volatilities on Citigroup and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and American Beacon.
Diversification Opportunities for Citigroup and American Beacon
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and American is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Shapiro has no effect on the direction of Citigroup i.e., Citigroup and American Beacon go up and down completely randomly.
Pair Corralation between Citigroup and American Beacon
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.16 times more return on investment than American Beacon. However, Citigroup is 2.16 times more volatile than American Beacon Shapiro. It trades about 0.33 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about 0.33 per unit of risk. If you would invest 6,235 in Citigroup on September 4, 2024 and sell it today you would earn a total of 904.00 from holding Citigroup or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Citigroup vs. American Beacon Shapiro
Performance |
| Timeline |
| Citigroup |
| American Beacon Shapiro |
Citigroup and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and American Beacon
The main advantage of trading using opposite Citigroup and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| American Beacon vs. T Rowe Price | American Beacon vs. T Rowe Price | American Beacon vs. T Rowe Price | American Beacon vs. Transamerica Asset Allocation |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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