Correlation Between Citigroup and Peapack Gladstone

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

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

Diversification Opportunities for Citigroup and Peapack Gladstone

0.91

Correlation Coefficient

Citigroup  Peapack Gladstone

Almost no diversification

The 3 months correlation between Citigroup and Peapack is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Peapack Gladstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peapack Gladstone 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 Peapack Gladstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peapack Gladstone has no effect on the direction of Citigroup i.e., Citigroup and Peapack Gladstone go up and down completely randomly.

Pair Corralation between Citigroup and Peapack Gladstone

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.63 times more return on investment than Peapack Gladstone. However, Citigroup is 1.58 times less risky than Peapack Gladstone. It trades about 0.12 of its potential returns per unit of risk. Peapack Gladstone Financial is currently generating about 0.05 per unit of risk. If you would invest  4,004  in Citigroup on September 12, 2024 and sell it today you would earn a total of  3,200  from holding Citigroup or generate 79.92% 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.  Peapack Gladstone Financial

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.

Peapack Gladstone

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Peapack Gladstone Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Peapack Gladstone exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Peapack Gladstone

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

The idea behind Citigroup and Peapack Gladstone Financial 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.