Correlation Between Citigroup and Customers Bancorp

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

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

Diversification Opportunities for Citigroup and Customers Bancorp

-0.06

Correlation Coefficient

Citigroup  Customers Bancorp

Good diversification

The 3 months correlation between Citigroup and Customers is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Customers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Customers Bancorp 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 Customers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Customers Bancorp has no effect on the direction of Citigroup i.e., Citigroup and Customers Bancorp go up and down completely randomly.

Pair Corralation between Citigroup and Customers Bancorp

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.02 times less return on investment than Customers Bancorp. But when comparing it to its historical volatility, Citigroup is 1.38 times less risky than Customers Bancorp. It trades about 0.06 of its potential returns per unit of risk. Customers Bancorp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,943  in Customers Bancorp on September 21, 2024 and sell it today you would earn a total of  53.00  from holding Customers Bancorp or generate 2.73% return on investment over 90 days.

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

Citigroup  vs.  Customers Bancorp

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Customers Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Customers Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Customers Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Customers Bancorp

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

The idea behind Citigroup and Customers Bancorp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.