Correlation Between Citigroup and Five Star
Can any of the company-specific risk be diversified away by investing in both Citigroup and Five Star 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 Five Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Five Star Bancorp, you can compare the effects of market volatilities on Citigroup and Five Star 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 Five Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Five Star.
Diversification Opportunities for Citigroup and Five Star
Excellent diversification
The 3 months correlation between Citigroup and Five is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Five Star Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Star Bancorp 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 Five Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Star Bancorp has no effect on the direction of Citigroup i.e., Citigroup and Five Star go up and down completely randomly.
Pair Corralation between Citigroup and Five Star
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.68 times more return on investment than Five Star. However, Citigroup is 1.47 times less risky than Five Star. It trades about 0.1 of its potential returns per unit of risk. Five Star Bancorp is currently generating about 0.03 per unit of risk. If you would invest 4,567 in Citigroup on January 26, 2024 and sell it today you would earn a total of 1,680 from holding Citigroup or generate 36.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Five Star Bancorp
Performance |
| Timeline |
| Citigroup |
| Five Star Bancorp |
Citigroup and Five Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Five Star
The main advantage of trading using opposite Citigroup and Five Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Five Star 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 Five Star will offset losses from the drop in Five Star's long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Five Star vs. Community West Bancshares | Five Star vs. HMN Financial | Five Star vs. First Northwest Bancorp | Five Star vs. Cullman Bancorp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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