Correlation Between Citigroup and Deutsche Small
Can any of the company-specific risk be diversified away by investing in both Citigroup and Deutsche Small 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 Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Deutsche Small Cap, you can compare the effects of market volatilities on Citigroup and Deutsche Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Deutsche Small.
Diversification Opportunities for Citigroup and Deutsche Small
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Deutsche is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Deutsche Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Small Cap has no effect on the direction of Citigroup i.e., Citigroup and Deutsche Small go up and down completely randomly.
Pair Corralation between Citigroup and Deutsche Small
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.45 times more return on investment than Deutsche Small. However, Citigroup is 1.45 times more volatile than Deutsche Small Cap. It trades about 0.07 of its potential returns per unit of risk. Deutsche Small Cap is currently generating about 0.05 per unit of risk. If you would invest 4,293 in Citigroup on September 3, 2024 and sell it today you would earn a total of 2,794 from holding Citigroup or generate 65.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Deutsche Small Cap
Performance |
| Timeline |
| Citigroup |
| Deutsche Small Cap |
Citigroup and Deutsche Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Deutsche Small
The main advantage of trading using opposite Citigroup and Deutsche Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Deutsche Small 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 Small will offset losses from the drop in Deutsche Small's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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