Correlation Between Citigroup and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Citigroup and Universal Insurance 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 Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Universal Insurance Holdings, you can compare the effects of market volatilities on Citigroup and Universal Insurance 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 Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Universal Insurance.
Diversification Opportunities for Citigroup and Universal Insurance
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and Universal is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Citigroup i.e., Citigroup and Universal Insurance go up and down completely randomly.
Pair Corralation between Citigroup and Universal Insurance
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.56 times more return on investment than Universal Insurance. However, Citigroup is 1.78 times less risky than Universal Insurance. It trades about 0.11 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about 0.06 per unit of risk. If you would invest 6,125 in Citigroup on August 25, 2024 and sell it today you would earn a total of 859.00 from holding Citigroup or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Universal Insurance Holdings
Performance |
| Timeline |
| Citigroup |
| Universal Insurance |
Citigroup and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Universal Insurance
The main advantage of trading using opposite Citigroup and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Universal Insurance 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal |
| Universal Insurance vs. HCI Group | Universal Insurance vs. Kingstone Companies | Universal Insurance vs. Horace Mann Educators | Universal Insurance vs. Heritage Insurance Hldgs |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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