Correlation Between Citigroup and Bar Harbor

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Can any of the company-specific risk be diversified away by investing in both Citigroup and Bar Harbor 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 Bar Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Bar Harbor Bankshares, you can compare the effects of market volatilities on Citigroup and Bar Harbor 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 Bar Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Bar Harbor.

Diversification Opportunities for Citigroup and Bar Harbor

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Citigroup and Bar Harbor is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Bar Harbor Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bar Harbor Bankshares 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 Bar Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bar Harbor Bankshares has no effect on the direction of Citigroup i.e., Citigroup and Bar Harbor go up and down completely randomly.

Pair Corralation between Citigroup and Bar Harbor

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.42 times less return on investment than Bar Harbor. But when comparing it to its historical volatility, Citigroup is 1.1 times less risky than Bar Harbor. It trades about 0.3 of its potential returns per unit of risk. Bar Harbor Bankshares is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  2,666  in Bar Harbor Bankshares on May 18, 2022 and sell it today you would earn a total of  359.00  from holding Bar Harbor Bankshares or generate 13.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  Bar Harbor Bankshares

 Performance (%) 
       Timeline  
Citigroup 
Citigroup Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Citigroup Price Channel

Bar Harbor Bankshares 
Bar Harbor Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bar Harbor Bankshares are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Bar Harbor sustained solid returns over the last few months and may actually be approaching a breakup point.

Bar Harbor Price Channel

Citigroup and Bar Harbor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Bar Harbor

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

Bar Harbor Bankshares

Pair trading matchups for Bar Harbor

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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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