Correlation Between Citigroup and American Funds
Can any of the company-specific risk be diversified away by investing in both Citigroup and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and American Funds Retirement, you can compare the effects of market volatilities on Citigroup and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and American Funds.
Diversification Opportunities for Citigroup and American Funds
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and American is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and American Funds Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Retirement 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Retirement has no effect on the direction of Citigroup i.e., Citigroup and American Funds go up and down completely randomly.
Pair Corralation between Citigroup and American Funds
Taking into account the 90-day investment horizon Citigroup is expected to generate 5.85 times more return on investment than American Funds. However, Citigroup is 5.85 times more volatile than American Funds Retirement. It trades about 0.14 of its potential returns per unit of risk. American Funds Retirement is currently generating about -0.12 per unit of risk. If you would invest 6,117 in Citigroup on September 26, 2024 and sell it today you would earn a total of 983.00 from holding Citigroup or generate 16.07% 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. American Funds Retirement
Performance |
Timeline |
Citigroup |
American Funds Retirement |
Citigroup and American Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and American Funds
The main advantage of trading using opposite Citigroup and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.The idea behind Citigroup and American Funds Retirement 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.American Funds vs. The National Tax Free | American Funds vs. Bbh Intermediate Municipal | American Funds vs. Metropolitan West Porate | American Funds vs. Versatile Bond Portfolio |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |