Correlation Between Citigroup and Growth Opportunities
Can any of the company-specific risk be diversified away by investing in both Citigroup and Growth Opportunities 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 Growth Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Growth Opportunities Fund, you can compare the effects of market volatilities on Citigroup and Growth Opportunities 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 Growth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Growth Opportunities.
Diversification Opportunities for Citigroup and Growth Opportunities
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and GROWTH is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Growth Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Opportunities 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 Growth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Opportunities has no effect on the direction of Citigroup i.e., Citigroup and Growth Opportunities go up and down completely randomly.
Pair Corralation between Citigroup and Growth Opportunities
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.57 times more return on investment than Growth Opportunities. However, Citigroup is 1.57 times more volatile than Growth Opportunities Fund. It trades about 0.08 of its potential returns per unit of risk. Growth Opportunities Fund is currently generating about 0.11 per unit of risk. If you would invest 4,544 in Citigroup on September 1, 2024 and sell it today you would earn a total of 2,543 from holding Citigroup or generate 55.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Growth Opportunities Fund
Performance |
| Timeline |
| Citigroup |
| Growth Opportunities |
Citigroup and Growth Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Growth Opportunities
The main advantage of trading using opposite Citigroup and Growth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Growth Opportunities 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 Growth Opportunities will offset losses from the drop in Growth Opportunities' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Growth Opportunities vs. Virtus Real Estate | Growth Opportunities vs. Prudential Real Estate | Growth Opportunities vs. Deutsche Real Estate | Growth Opportunities vs. Goldman Sachs Real |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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