Correlation Between Citigroup and Thornburg Intermediate
Can any of the company-specific risk be diversified away by investing in both Citigroup and Thornburg Intermediate 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 Thornburg Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Thornburg Intermediate Municipal, you can compare the effects of market volatilities on Citigroup and Thornburg Intermediate 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 Thornburg Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Thornburg Intermediate.
Diversification Opportunities for Citigroup and Thornburg Intermediate
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Thornburg is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Thornburg Intermediate Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Intermediate 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 Thornburg Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Intermediate has no effect on the direction of Citigroup i.e., Citigroup and Thornburg Intermediate go up and down completely randomly.
Pair Corralation between Citigroup and Thornburg Intermediate
Taking into account the 90-day investment horizon Citigroup is expected to generate 9.77 times more return on investment than Thornburg Intermediate. However, Citigroup is 9.77 times more volatile than Thornburg Intermediate Municipal. It trades about 0.07 of its potential returns per unit of risk. Thornburg Intermediate Municipal is currently generating about 0.09 per unit of risk. If you would invest 4,206 in Citigroup on August 26, 2024 and sell it today you would earn a total of 2,778 from holding Citigroup or generate 66.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Thornburg Intermediate Municip
Performance |
| Timeline |
| Citigroup |
| Thornburg Intermediate |
Citigroup and Thornburg Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Thornburg Intermediate
The main advantage of trading using opposite Citigroup and Thornburg Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Thornburg Intermediate 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 Thornburg Intermediate will offset losses from the drop in Thornburg Intermediate's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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