Correlation Between Citigroup and TD Active
Can any of the company-specific risk be diversified away by investing in both Citigroup and TD Active 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 TD Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and TD Active Global, you can compare the effects of market volatilities on Citigroup and TD Active 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 TD Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and TD Active.
Diversification Opportunities for Citigroup and TD Active
Very poor diversification
The 3 months correlation between Citigroup and TGGR is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and TD Active Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Active Global 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 TD Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Active Global has no effect on the direction of Citigroup i.e., Citigroup and TD Active go up and down completely randomly.
Pair Corralation between Citigroup and TD Active
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.2 times more return on investment than TD Active. However, Citigroup is 2.2 times more volatile than TD Active Global. It trades about 0.21 of its potential returns per unit of risk. TD Active Global is currently generating about 0.13 per unit of risk. If you would invest 6,360 in Citigroup on August 29, 2024 and sell it today you would earn a total of 615.00 from holding Citigroup or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. TD Active Global
Performance |
| Timeline |
| Citigroup |
| TD Active Global |
Citigroup and TD Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and TD Active
The main advantage of trading using opposite Citigroup and TD Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, TD Active 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 TD Active will offset losses from the drop in TD Active's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| TD Active vs. TD Active Enhanced | TD Active vs. TD Active Global | TD Active vs. TD Active Global | TD Active vs. TD Active Global |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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