Correlation Between Citigroup and Dfa California

Can any of the company-specific risk be diversified away by investing in both Citigroup and Dfa California 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 Dfa California into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Dfa California Municipal, you can compare the effects of market volatilities on Citigroup and Dfa California 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 Dfa California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Dfa California.

Diversification Opportunities for Citigroup and Dfa California

0.94

Correlation Coefficient

Citigroup  Dfa California

Almost no diversification

The 3 months correlation between Citigroup and Dfa is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Dfa California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa California Municipal 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 Dfa California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa California Municipal has no effect on the direction of Citigroup i.e., Citigroup and Dfa California go up and down completely randomly.

Pair Corralation between Citigroup and Dfa California

Taking into account the 90-day investment horizon Citigroup is expected to generate 21.39 times more return on investment than Dfa California. However, Citigroup is 21.39 times more volatile than Dfa California Municipal. It trades about 0.32 of its potential returns per unit of risk. Dfa California Municipal is currently generating about 0.2 per unit of risk. If you would invest  7,003  in Citigroup on May 2, 2025 and sell it today you would earn a total of  2,367  from holding Citigroup or generate 33.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Dfa California Municipal

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dfa California Municipal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa California Municipal are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dfa California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Dfa California

The main advantage of trading using opposite Citigroup and Dfa California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Dfa California 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 Dfa California will offset losses from the drop in Dfa California's long position.

The idea behind Citigroup and Dfa California Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.