Correlation Between Citigroup and Aggressive Growth
Can any of the company-specific risk be diversified away by investing in both Citigroup and Aggressive 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 Aggressive Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Aggressive Growth Fund, you can compare the effects of market volatilities on Citigroup and Aggressive 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 Aggressive Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Aggressive Growth.
Diversification Opportunities for Citigroup and Aggressive Growth
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and Aggressive is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aggressive Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive 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 Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of Citigroup i.e., Citigroup and Aggressive Growth go up and down completely randomly.
Pair Corralation between Citigroup and Aggressive Growth
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.49 times more return on investment than Aggressive Growth. However, Citigroup is 1.49 times more volatile than Aggressive Growth Fund. It trades about 0.08 of its potential returns per unit of risk. Aggressive Growth Fund is currently generating about 0.09 per unit of risk. If you would invest 5,992 in Citigroup on September 2, 2024 and sell it today you would earn a total of 1,095 from holding Citigroup or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Aggressive Growth Fund
Performance |
| Timeline |
| Citigroup |
| Aggressive Growth |
Citigroup and Aggressive Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Aggressive Growth
The main advantage of trading using opposite Citigroup and Aggressive Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Aggressive 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 Aggressive Growth will offset losses from the drop in Aggressive Growth's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Aggressive Growth vs. Tax Managed Large Cap | Aggressive Growth vs. Goldman Sachs Large | Aggressive Growth vs. Morningstar Unconstrained Allocation | Aggressive Growth 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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