Correlation Between Target and Citigroup
Can any of the company-specific risk be diversified away by investing in both Target 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 Target and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and Citigroup, you can compare the effects of market volatilities on Target 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 Target with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Citigroup.
Diversification Opportunities for Target and Citigroup
Almost no diversification
The 3 months correlation between Target and Citigroup is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Target and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Target 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 Target 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 Target i.e., Target and Citigroup go up and down completely randomly.
Pair Corralation between Target and Citigroup
Considering the 90-day investment horizon Target is expected to generate 0.85 times more return on investment than Citigroup. However, Target is 1.17 times less risky than Citigroup. It trades about -0.04 of its potential returns per unit of risk. Citigroup is currently generating about -0.05 per unit of risk. If you would invest 17,046 in Target on January 20, 2024 and sell it today you would lose (216.00) from holding Target or give up 1.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target vs. Citigroup
Performance |
| Timeline |
| Target |
| Citigroup |
Target and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and Citigroup
The main advantage of trading using opposite Target and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 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.| Target vs. Aquagold International | Target vs. Morningstar Unconstrained Allocation | Target vs. Thrivent High Yield | Target vs. Via Renewables |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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