Correlation Between Citigroup and Timothy Plan

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

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

Diversification Opportunities for Citigroup and Timothy Plan

-0.51

Correlation Coefficient

Citigroup  Timothy Plan

Excellent diversification

The 3 months correlation between Citigroup and Timothy is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Timothy Plan Defensive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Defensive 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 Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan Defensive has no effect on the direction of Citigroup i.e., Citigroup and Timothy Plan go up and down completely randomly.

Pair Corralation between Citigroup and Timothy Plan

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.55 times more return on investment than Timothy Plan. However, Citigroup is 3.55 times more volatile than Timothy Plan Defensive. It trades about 0.1 of its potential returns per unit of risk. Timothy Plan Defensive is currently generating about 0.04 per unit of risk. If you would invest  4,910  in Citigroup on September 14, 2024 and sell it today you would earn a total of  2,191  from holding Citigroup or generate 44.62% return on investment over 90 days.

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

Citigroup  vs.  Timothy Plan Defensive

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 Plan Defensive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timothy Plan Defensive has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Timothy Plan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Timothy Plan

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

The idea behind Citigroup and Timothy Plan Defensive 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.