Correlation Between Citigroup and Steward Small-mid
Can any of the company-specific risk be diversified away by investing in both Citigroup and Steward Small-mid 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 Steward Small-mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Steward Small Mid Cap, you can compare the effects of market volatilities on Citigroup and Steward Small-mid 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 Steward Small-mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Steward Small-mid.
Diversification Opportunities for Citigroup and Steward Small-mid
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Steward is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Steward Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Small Mid 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 Steward Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Small Mid has no effect on the direction of Citigroup i.e., Citigroup and Steward Small-mid go up and down completely randomly.
Pair Corralation between Citigroup and Steward Small-mid
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.65 times more return on investment than Steward Small-mid. However, Citigroup is 1.65 times more volatile than Steward Small Mid Cap. It trades about 0.08 of its potential returns per unit of risk. Steward Small Mid Cap is currently generating about 0.11 per unit of risk. If you would invest 6,065 in Citigroup on September 5, 2024 and sell it today you would earn a total of 1,085 from holding Citigroup or generate 17.89% 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. Steward Small Mid Cap
Performance |
Timeline |
Citigroup |
Steward Small Mid |
Citigroup and Steward Small-mid Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Steward Small-mid
The main advantage of trading using opposite Citigroup and Steward Small-mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Steward Small-mid 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 Steward Small-mid will offset losses from the drop in Steward Small-mid's long position.Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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