Correlation Between Citigroup and Timothy Largemid

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

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

Diversification Opportunities for Citigroup and Timothy Largemid

0.02

Correlation Coefficient

Citigroup  Timothy Largemid

Significant diversification

The 3 months correlation between Citigroup and Timothy is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Timothy Largemid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Largemid Cap 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 Timothy Largemid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Largemid Cap has no effect on the direction of Citigroup i.e., Citigroup and Timothy Largemid go up and down completely randomly.

Pair Corralation between Citigroup and Timothy Largemid

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.2 times more return on investment than Timothy Largemid. However, Citigroup is 1.2 times more volatile than Timothy Largemid Cap Value. It trades about 0.18 of its potential returns per unit of risk. Timothy Largemid Cap Value is currently generating about -0.12 per unit of risk. If you would invest  5,788  in Citigroup on September 14, 2024 and sell it today you would earn a total of  1,313  from holding Citigroup or generate 22.68% return on investment over 90 days.

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

Citigroup  vs.  Timothy Largemid Cap Value

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Timothy Largemid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timothy Largemid Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Citigroup and Timothy Largemid

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

The idea behind Citigroup and Timothy Largemid Cap Value 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.