Correlation Between Prosperity Bancshares and Citigroup
Can any of the company-specific risk be diversified away by investing in both Prosperity Bancshares 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 Prosperity Bancshares and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Bancshares and Citigroup, you can compare the effects of market volatilities on Prosperity Bancshares 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 Prosperity Bancshares with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Bancshares and Citigroup.
Diversification Opportunities for Prosperity Bancshares and Citigroup
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prosperity and Citigroup is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Bancshares and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Prosperity Bancshares 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 Prosperity 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 Prosperity Bancshares i.e., Prosperity Bancshares and Citigroup go up and down completely randomly.
Pair Corralation between Prosperity Bancshares and Citigroup
Allowing for the 90-day total investment horizon Prosperity Bancshares is expected to generate 1.17 times more return on investment than Citigroup. However, Prosperity Bancshares is 1.17 times more volatile than Citigroup. It trades about 0.1 of its potential returns per unit of risk. Citigroup is currently generating about 0.05 per unit of risk. If you would invest 6,278 in Prosperity Bancshares on January 26, 2024 and sell it today you would earn a total of 230.00 from holding Prosperity Bancshares or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosperity Bancshares vs. Citigroup
Performance |
| Timeline |
| Prosperity Bancshares |
| Citigroup |
Prosperity Bancshares and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Bancshares and Citigroup
The main advantage of trading using opposite Prosperity Bancshares and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Bancshares 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.| Prosperity Bancshares vs. Heartland Financial USA | Prosperity Bancshares vs. Heritage Commerce Corp | Prosperity Bancshares vs. Business First Bancshares | Prosperity Bancshares vs. German American 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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