Correlation Between Citigroup and Carver Bancorp

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

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

Diversification Opportunities for Citigroup and Carver Bancorp

-0.49

Correlation Coefficient

Citigroup  Carver Bancorp

Very good diversification

The 3 months correlation between Citigroup and Carver is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Carver Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carver Bancorp 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 Carver Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carver Bancorp has no effect on the direction of Citigroup i.e., Citigroup and Carver Bancorp go up and down completely randomly.

Pair Corralation between Citigroup and Carver Bancorp

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.45 times more return on investment than Carver Bancorp. However, Citigroup is 2.2 times less risky than Carver Bancorp. It trades about 0.15 of its potential returns per unit of risk. Carver Bancorp is currently generating about -0.01 per unit of risk. If you would invest  6,010  in Citigroup on September 5, 2024 and sell it today you would earn a total of  1,132  from holding Citigroup or generate 18.84% 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.  Carver Bancorp

Citigroup

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

Carver Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carver Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Carver Bancorp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citigroup and Carver Bancorp

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

The idea behind Citigroup and Carver Bancorp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.