Correlation Between Citigroup and Heartland Banccorp

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

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

Diversification Opportunities for Citigroup and Heartland Banccorp

0.69

Correlation Coefficient

Citigroup  Heartland Banccorp

Poor diversification

The 3 months correlation between Citigroup and Heartland is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Heartland Banccorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Banccorp 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 Heartland Banccorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Banccorp has no effect on the direction of Citigroup i.e., Citigroup and Heartland Banccorp go up and down completely randomly.

Pair Corralation between Citigroup and Heartland Banccorp

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.44 times less return on investment than Heartland Banccorp. In addition to that, Citigroup is 1.25 times more volatile than Heartland Banccorp. It trades about 0.01 of its total potential returns per unit of risk. Heartland Banccorp is currently generating about 0.12 per unit of volatility. If you would invest  15,327  in Heartland Banccorp on December 29, 2024 and sell it today you would earn a total of  673.00  from holding Heartland Banccorp or generate 4.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	39.34%
Values	Daily Returns

Citigroup  vs.  Heartland Banccorp

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Heartland Banccorp

Risk-Adjusted Performance

OK

Over the last 90 days Heartland Banccorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile basic indicators, Heartland Banccorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and Heartland Banccorp

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

The idea behind Citigroup and Heartland Banccorp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.