Correlation Between Citigroup and Prudential Plc
Can any of the company-specific risk be diversified away by investing in both Citigroup and Prudential Plc 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 Prudential Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Prudential plc, you can compare the effects of market volatilities on Citigroup and Prudential Plc 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 Prudential Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Prudential Plc.
Diversification Opportunities for Citigroup and Prudential Plc
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Citigroup and Prudential is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Prudential plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential plc 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 Prudential Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential plc has no effect on the direction of Citigroup i.e., Citigroup and Prudential Plc go up and down completely randomly.
Pair Corralation between Citigroup and Prudential Plc
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.71 times more return on investment than Prudential Plc. However, Citigroup is 1.42 times less risky than Prudential Plc. It trades about 0.11 of its potential returns per unit of risk. Prudential plc is currently generating about -0.09 per unit of risk. If you would invest 4,469 in Citigroup on January 24, 2024 and sell it today you would earn a total of 1,626 from holding Citigroup or generate 36.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.56% |
| Values | Daily Returns |
Citigroup vs. Prudential plc
Performance |
| Timeline |
| Citigroup |
| Prudential plc |
Citigroup and Prudential Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Prudential Plc
The main advantage of trading using opposite Citigroup and Prudential Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Prudential Plc 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 Prudential Plc will offset losses from the drop in Prudential Plc's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Prudential Plc vs. AIA Group Limited | Prudential Plc vs. MetLife | Prudential Plc vs. Prudential Financial | Prudential Plc vs. Dai ichi Life 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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