Correlation Between Citigroup and Financial Select
Can any of the company-specific risk be diversified away by investing in both Citigroup and Financial Select 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 Financial Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Financial Select Sector, you can compare the effects of market volatilities on Citigroup and Financial Select 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 Financial Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Financial Select.
Diversification Opportunities for Citigroup and Financial Select
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Financial is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Financial Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Select Sector 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 Financial Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Select Sector has no effect on the direction of Citigroup i.e., Citigroup and Financial Select go up and down completely randomly.
Pair Corralation between Citigroup and Financial Select
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.81 times more return on investment than Financial Select. However, Citigroup is 1.81 times more volatile than Financial Select Sector. It trades about 0.11 of its potential returns per unit of risk. Financial Select Sector is currently generating about 0.17 per unit of risk. If you would invest 6,209 in Citigroup on August 30, 2024 and sell it today you would earn a total of 807.00 from holding Citigroup or generate 13.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Financial Select Sector
Performance |
| Timeline |
| Citigroup |
| Financial Select Sector |
Citigroup and Financial Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Financial Select
The main advantage of trading using opposite Citigroup and Financial Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Financial Select 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 Financial Select will offset losses from the drop in Financial Select's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Financial Select vs. Energy Select Sector | Financial Select vs. Technology Select Sector | Financial Select vs. Health Care Select | Financial Select vs. Industrial Select Sector |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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