Correlation Between Citigroup and West Bancorporation
Can any of the company-specific risk be diversified away by investing in both Citigroup and West Bancorporation 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 West Bancorporation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and West Bancorporation, you can compare the effects of market volatilities on Citigroup and West Bancorporation 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 West Bancorporation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and West Bancorporation.
Diversification Opportunities for Citigroup and West Bancorporation
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and West is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and West Bancorp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Bancorporation 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 West Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Bancorporation has no effect on the direction of Citigroup i.e., Citigroup and West Bancorporation go up and down completely randomly.
Pair Corralation between Citigroup and West Bancorporation
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.68 times more return on investment than West Bancorporation. However, Citigroup is 1.46 times less risky than West Bancorporation. It trades about 0.33 of its potential returns per unit of risk. West Bancorporation is currently generating about 0.2 per unit of risk. If you would invest 6,235 in Citigroup on September 4, 2024 and sell it today you would earn a total of 904.00 from holding Citigroup or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. West Bancorp.
Performance |
| Timeline |
| Citigroup |
| West Bancorporation |
Citigroup and West Bancorporation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and West Bancorporation
The main advantage of trading using opposite Citigroup and West Bancorporation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, West Bancorporation 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 West Bancorporation will offset losses from the drop in West Bancorporation's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| West Bancorporation vs. MidWestOne Financial Group | West Bancorporation vs. Washington Trust Bancorp | West Bancorporation vs. Univest Pennsylvania | West Bancorporation vs. Sierra Bancorp |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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