Correlation Between Citigroup and Sierra Tactical
Can any of the company-specific risk be diversified away by investing in both Citigroup and Sierra Tactical 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 Sierra Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Sierra Tactical Bond, you can compare the effects of market volatilities on Citigroup and Sierra Tactical 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 Sierra Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Sierra Tactical.
Diversification Opportunities for Citigroup and Sierra Tactical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Sierra is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Sierra Tactical Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Tactical Bond 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 Sierra Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Tactical Bond has no effect on the direction of Citigroup i.e., Citigroup and Sierra Tactical go up and down completely randomly.
Pair Corralation between Citigroup and Sierra Tactical
Taking into account the 90-day investment horizon Citigroup is expected to generate 13.32 times more return on investment than Sierra Tactical. However, Citigroup is 13.32 times more volatile than Sierra Tactical Bond. It trades about 0.26 of its potential returns per unit of risk. Sierra Tactical Bond is currently generating about 0.21 per unit of risk. If you would invest 6,361 in Citigroup on September 1, 2024 and sell it today you would earn a total of 726.00 from holding Citigroup or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Sierra Tactical Bond
Performance |
| Timeline |
| Citigroup |
| Sierra Tactical Bond |
Citigroup and Sierra Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Sierra Tactical
The main advantage of trading using opposite Citigroup and Sierra Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Sierra Tactical 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 Sierra Tactical will offset losses from the drop in Sierra Tactical'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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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