Correlation Between Citigroup and T Rowe
Can any of the company-specific risk be diversified away by investing in both Citigroup and T Rowe 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 T Rowe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and T Rowe Price, you can compare the effects of market volatilities on Citigroup and T Rowe 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 T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and T Rowe.
Diversification Opportunities for Citigroup and T Rowe
Very poor diversification
The 3 months correlation between Citigroup and TRSAX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Citigroup i.e., Citigroup and T Rowe go up and down completely randomly.
Pair Corralation between Citigroup and T Rowe
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.03 times more return on investment than T Rowe. However, Citigroup is 2.03 times more volatile than T Rowe Price. It trades about 0.21 of its potential returns per unit of risk. T Rowe Price is currently generating about 0.15 per unit of risk. If you would invest 6,255 in Citigroup on August 24, 2024 and sell it today you would earn a total of 640.00 from holding Citigroup or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. T Rowe Price
Performance |
| Timeline |
| Citigroup |
| T Rowe Price |
Citigroup and T Rowe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and T Rowe
The main advantage of trading using opposite Citigroup and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| T Rowe vs. Jpmorgan Mid Cap | T Rowe vs. T Rowe Price | T Rowe vs. Tcw Relative Value | T Rowe vs. T Rowe Price |
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.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |