Correlation Between Citigroup and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Citigroup and Wells Fargo 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 Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Wells Fargo Enterprise, you can compare the effects of market volatilities on Citigroup and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Wells Fargo.
Diversification Opportunities for Citigroup and Wells Fargo
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Citigroup and Wells is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Wells Fargo Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Enterprise 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Enterprise has no effect on the direction of Citigroup i.e., Citigroup and Wells Fargo go up and down completely randomly.
Pair Corralation between Citigroup and Wells Fargo
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.62 times more return on investment than Wells Fargo. However, Citigroup is 1.62 times less risky than Wells Fargo. It trades about 0.04 of its potential returns per unit of risk. Wells Fargo Enterprise is currently generating about -0.23 per unit of risk. If you would invest 7,250 in Citigroup on October 11, 2024 and sell it today you would earn a total of 76.00 from holding Citigroup or generate 1.05% 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. Wells Fargo Enterprise
Performance |
| Timeline |
| Citigroup |
| Wells Fargo Enterprise |
Citigroup and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Wells Fargo
The main advantage of trading using opposite Citigroup and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Citigroup vs. Royal Bank of | Citigroup vs. JPMorgan Chase Co | Citigroup vs. Nu Holdings | Citigroup vs. Canadian Imperial Bank |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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