Correlation Between Citigroup and Howard Bancorp

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

Diversification Opportunities for Citigroup and Howard Bancorp

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Citigroup and Howard is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Howard Bancorp Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Howard 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 Howard Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howard Bancorp has no effect on the direction of Citigroup i.e., Citigroup and Howard Bancorp go up and down completely randomly.

Pair Corralation between Citigroup and Howard Bancorp

Taking into account the 90-day investment horizon Citigroup is expected to generate 7.6 times less return on investment than Howard Bancorp. But when comparing it to its historical volatility, Citigroup is 1.42 times less risky than Howard Bancorp. It trades about 0.02 of its potential returns per unit of risk. Howard Bancorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,047  in Howard Bancorp on February 18, 2022 and sell it today you would earn a total of  1,283  from holding Howard Bancorp or generate 122.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy83.26%
ValuesDaily Returns

Citigroup  vs.  Howard Bancorp Inc

 Performance (%) 
      Timeline 
Citigroup 
Citigroup Performance
0 of 100
Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Citigroup Price Channel

Howard Bancorp 
Howard Performance
0 of 100
Over the last 90 days Howard Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Howard Bancorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Citigroup and Howard Bancorp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Citigroup and Howard Bancorp

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

Citigroup

Pair trading matchups for Citigroup

The idea behind Citigroup and Howard Bancorp 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.

Howard Bancorp

Pair trading matchups for Howard 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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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