Correlation Between Citigroup and Orange County
Can any of the company-specific risk be diversified away by investing in both Citigroup and Orange County 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 Orange County into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Orange County Bancorp, you can compare the effects of market volatilities on Citigroup and Orange County 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 Orange County. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Orange County.
Diversification Opportunities for Citigroup and Orange County
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Citigroup and Orange is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Orange County Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange County 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 Orange County. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange County Bancorp has no effect on the direction of Citigroup i.e., Citigroup and Orange County go up and down completely randomly.
Pair Corralation between Citigroup and Orange County
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.14 times less return on investment than Orange County. But when comparing it to its historical volatility, Citigroup is 1.85 times less risky than Orange County. It trades about 0.06 of its potential returns per unit of risk. Orange County Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,030 in Orange County Bancorp on June 27, 2024 and sell it today you would earn a total of 1,674 from holding Orange County Bancorp or generate 41.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. Orange County Bancorp
Performance |
Timeline |
Citigroup |
Orange County Bancorp |
Citigroup and Orange County Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Orange County
The main advantage of trading using opposite Citigroup and Orange County positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Orange County 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 Orange County will offset losses from the drop in Orange County's long position.Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
Orange County vs. Southern States Bancshares | Orange County vs. US Century Bank | Orange County vs. Third Coast Bancshares | Orange County vs. Esquire Financial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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