Correlation Between Dime Community and Citigroup
Can any of the company-specific risk be diversified away by investing in both Dime Community and Citigroup 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 Dime Community and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dime Community Bancshares and Citigroup, you can compare the effects of market volatilities on Dime Community and Citigroup 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 Dime Community with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dime Community and Citigroup.
Diversification Opportunities for Dime Community and Citigroup
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dime and Citigroup is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dime Community Bancshares and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Dime Community 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 Dime Community Bancshares are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Dime Community i.e., Dime Community and Citigroup go up and down completely randomly.
Pair Corralation between Dime Community and Citigroup
Given the investment horizon of 90 days Dime Community is expected to generate 2.49 times less return on investment than Citigroup. In addition to that, Dime Community is 2.01 times more volatile than Citigroup. It trades about 0.04 of its total potential returns per unit of risk. Citigroup is currently generating about 0.21 per unit of volatility. If you would invest 5,593 in Citigroup on January 24, 2024 and sell it today you would earn a total of 674.00 from holding Citigroup or generate 12.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dime Community Bancshares vs. Citigroup
Performance |
| Timeline |
| Dime Community Bancshares |
| Citigroup |
Dime Community and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dime Community and Citigroup
The main advantage of trading using opposite Dime Community and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dime Community position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.| Dime Community vs. Cullman Bancorp | Dime Community vs. Home Federal Bancorp | Dime Community vs. First Financial Northwest | Dime Community vs. First Northwest Bancorp |
| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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