Correlation Between UMB Financial and Citigroup
Can any of the company-specific risk be diversified away by investing in both UMB Financial 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 UMB Financial and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UMB Financial and Citigroup, you can compare the effects of market volatilities on UMB Financial 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 UMB Financial with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMB Financial and Citigroup.
Diversification Opportunities for UMB Financial and Citigroup
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UMB and Citigroup is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding UMB Financial and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and UMB Financial 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 UMB Financial 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 UMB Financial i.e., UMB Financial and Citigroup go up and down completely randomly.
Pair Corralation between UMB Financial and Citigroup
Given the investment horizon of 90 days UMB Financial is expected to generate 4.09 times less return on investment than Citigroup. In addition to that, UMB Financial is 1.27 times more volatile than Citigroup. It trades about 0.01 of its total potential returns per unit of risk. Citigroup is currently generating about 0.04 per unit of volatility. If you would invest 4,637 in Citigroup on December 30, 2023 and sell it today you would earn a total of 1,687 from holding Citigroup or generate 36.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
UMB Financial vs. Citigroup
Performance |
Timeline |
UMB Financial |
Citigroup |
UMB Financial and Citigroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UMB Financial and Citigroup
The main advantage of trading using opposite UMB Financial and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMB Financial 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.UMB Financial vs. NeoMagic | UMB Financial vs. Allient | UMB Financial vs. Blue Hat Interactive | UMB Financial vs. ScanSource |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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