Correlation Between Citigroup and Moderately Conservative
Can any of the company-specific risk be diversified away by investing in both Citigroup and Moderately Conservative 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 Moderately Conservative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Moderately Servative Balanced, you can compare the effects of market volatilities on Citigroup and Moderately Conservative 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 Moderately Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Moderately Conservative.
Diversification Opportunities for Citigroup and Moderately Conservative
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Moderately is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Moderately Servative Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderately Conservative 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 Moderately Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderately Conservative has no effect on the direction of Citigroup i.e., Citigroup and Moderately Conservative go up and down completely randomly.
Pair Corralation between Citigroup and Moderately Conservative
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.75 times more return on investment than Moderately Conservative. However, Citigroup is 2.75 times more volatile than Moderately Servative Balanced. It trades about 0.07 of its potential returns per unit of risk. Moderately Servative Balanced is currently generating about 0.06 per unit of risk. If you would invest 4,118 in Citigroup on August 29, 2024 and sell it today you would earn a total of 2,857 from holding Citigroup or generate 69.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Moderately Servative Balanced
Performance |
| Timeline |
| Citigroup |
| Moderately Conservative |
Citigroup and Moderately Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Moderately Conservative
The main advantage of trading using opposite Citigroup and Moderately Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Moderately Conservative 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 Moderately Conservative will offset losses from the drop in Moderately Conservative's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Moderately Conservative vs. T Rowe Price | Moderately Conservative vs. Fundamental Large Cap | Moderately Conservative vs. Tax Managed Large Cap | Moderately Conservative vs. Washington Mutual Investors |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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