Correlation Between Citigroup and Designer Brands
Can any of the company-specific risk be diversified away by investing in both Citigroup and Designer Brands 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 Designer Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Designer Brands, you can compare the effects of market volatilities on Citigroup and Designer Brands 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 Designer Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Designer Brands.
Diversification Opportunities for Citigroup and Designer Brands
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Designer is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Designer Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Designer Brands 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 Designer Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Designer Brands has no effect on the direction of Citigroup i.e., Citigroup and Designer Brands go up and down completely randomly.
Pair Corralation between Citigroup and Designer Brands
Taking into account the 90-day investment horizon Citigroup is expected to generate 2.23 times less return on investment than Designer Brands. But when comparing it to its historical volatility, Citigroup is 1.72 times less risky than Designer Brands. It trades about 0.1 of its potential returns per unit of risk. Designer Brands is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 919.00 in Designer Brands on March 2, 2024 and sell it today you would earn a total of 50.00 from holding Designer Brands or generate 5.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Citigroup vs. Designer Brands
Performance |
Timeline |
Citigroup |
Designer Brands |
Citigroup and Designer Brands Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Citigroup and Designer Brands
The main advantage of trading using opposite Citigroup and Designer Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Designer Brands 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 Designer Brands will offset losses from the drop in Designer Brands' long position.Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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