Correlation Between Citigroup and Templeton Growth
Can any of the company-specific risk be diversified away by investing in both Citigroup and Templeton Growth 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 Templeton Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Templeton Growth Fund, you can compare the effects of market volatilities on Citigroup and Templeton Growth 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 Templeton Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Templeton Growth.
Diversification Opportunities for Citigroup and Templeton Growth
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Templeton is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Templeton Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Growth 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 Templeton Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Growth has no effect on the direction of Citigroup i.e., Citigroup and Templeton Growth go up and down completely randomly.
Pair Corralation between Citigroup and Templeton Growth
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.25 times more return on investment than Templeton Growth. However, Citigroup is 2.25 times more volatile than Templeton Growth Fund. It trades about 0.11 of its potential returns per unit of risk. Templeton Growth Fund is currently generating about 0.04 per unit of risk. If you would invest 5,135 in Citigroup on October 20, 2024 and sell it today you would earn a total of 2,864 from holding Citigroup or generate 55.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Templeton Growth Fund
Performance |
| Timeline |
| Citigroup |
| Templeton Growth |
Citigroup and Templeton Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Templeton Growth
The main advantage of trading using opposite Citigroup and Templeton Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Templeton Growth 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 Templeton Growth will offset losses from the drop in Templeton Growth's long position.| Citigroup vs. Bank of Montreal | Citigroup vs. Canadian Imperial Bank | Citigroup vs. Bank of Nova | Citigroup vs. JPMorgan Chase Co |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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