Correlation Between Citigroup and PFA Invest
Can any of the company-specific risk be diversified away by investing in both Citigroup and PFA Invest 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 PFA Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and PFA Invest Balance, you can compare the effects of market volatilities on Citigroup and PFA Invest 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 PFA Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and PFA Invest.
Diversification Opportunities for Citigroup and PFA Invest
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Citigroup and PFA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PFA Invest Balance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFA Invest Balance 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 PFA Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFA Invest Balance has no effect on the direction of Citigroup i.e., Citigroup and PFA Invest go up and down completely randomly.
Pair Corralation between Citigroup and PFA Invest
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.96 times more return on investment than PFA Invest. However, Citigroup is 2.96 times more volatile than PFA Invest Balance. It trades about 0.01 of its potential returns per unit of risk. PFA Invest Balance is currently generating about -0.21 per unit of risk. If you would invest 6,095 in Citigroup on January 24, 2024 and sell it today you would earn a total of 0.00 from holding Citigroup or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.0% |
| Values | Daily Returns |
Citigroup vs. PFA Invest Balance
Performance |
| Timeline |
| Citigroup |
| PFA Invest Balance |
Citigroup and PFA Invest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and PFA Invest
The main advantage of trading using opposite Citigroup and PFA Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, PFA Invest 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 PFA Invest will offset losses from the drop in PFA Invest's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| PFA Invest vs. Novo Nordisk AS | PFA Invest vs. Nordea Bank Abp | PFA Invest vs. DSV Panalpina AS | PFA Invest vs. AP Mller |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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