Correlation Between Citigroup and Schwab Target
Can any of the company-specific risk be diversified away by investing in both Citigroup and Schwab Target 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 Schwab Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Schwab Target 2010, you can compare the effects of market volatilities on Citigroup and Schwab Target 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 Schwab Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Schwab Target.
Diversification Opportunities for Citigroup and Schwab Target
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Schwab is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Schwab Target 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Target 2010 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 Schwab Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Target 2010 has no effect on the direction of Citigroup i.e., Citigroup and Schwab Target go up and down completely randomly.
Pair Corralation between Citigroup and Schwab Target
Taking into account the 90-day investment horizon Citigroup is expected to generate 5.08 times more return on investment than Schwab Target. However, Citigroup is 5.08 times more volatile than Schwab Target 2010. It trades about 0.09 of its potential returns per unit of risk. Schwab Target 2010 is currently generating about 0.12 per unit of risk. If you would invest 5,476 in Citigroup on September 1, 2024 and sell it today you would earn a total of 1,611 from holding Citigroup or generate 29.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Citigroup vs. Schwab Target 2010
Performance |
| Timeline |
| Citigroup |
| Schwab Target 2010 |
Citigroup and Schwab Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Schwab Target
The main advantage of trading using opposite Citigroup and Schwab Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Schwab Target 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 Schwab Target will offset losses from the drop in Schwab Target's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Schwab Target vs. Delaware Limited Term Diversified | Schwab Target vs. American Funds Conservative | Schwab Target vs. Pgim Conservative Retirement | Schwab Target vs. Pimco Diversified Income |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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