Correlation Between Citigroup and AGF American

Can any of the company-specific risk be diversified away by investing in both Citigroup and AGF American 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 AGF American into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and AGF American Growth, you can compare the effects of market volatilities on Citigroup and AGF American 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 AGF American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and AGF American.

Diversification Opportunities for Citigroup and AGF American

0.88

Correlation Coefficient

Citigroup  AGF American

Very poor diversification

The 3 months correlation between Citigroup and AGF is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AGF American Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF American 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 AGF American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF American Growth has no effect on the direction of Citigroup i.e., Citigroup and AGF American go up and down completely randomly.

Pair Corralation between Citigroup and AGF American

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.15 times less return on investment than AGF American. In addition to that, Citigroup is 1.29 times more volatile than AGF American Growth. It trades about 0.04 of its total potential returns per unit of risk. AGF American Growth is currently generating about 0.07 per unit of volatility. If you would invest  7,224  in AGF American Growth on October 11, 2024 and sell it today you would earn a total of  95.00  from holding AGF American Growth or generate 1.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  AGF American Growth

Citigroup

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

AGF American Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGF American Growth are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, AGF American may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citigroup and AGF American

The main advantage of trading using opposite Citigroup and AGF American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, AGF American 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 AGF American will offset losses from the drop in AGF American's long position.

The idea behind Citigroup and AGF American Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stocks Directory module to find actively traded stocks across global markets.