Correlation Between Citigroup and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Citigroup and Federated Hermes 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 Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Federated Hermes Inflation, you can compare the effects of market volatilities on Citigroup and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Federated Hermes.
Diversification Opportunities for Citigroup and Federated Hermes
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Federated is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Federated Hermes Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Inf 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Inf has no effect on the direction of Citigroup i.e., Citigroup and Federated Hermes go up and down completely randomly.
Pair Corralation between Citigroup and Federated Hermes
Taking into account the 90-day investment horizon Citigroup is expected to generate 5.25 times more return on investment than Federated Hermes. However, Citigroup is 5.25 times more volatile than Federated Hermes Inflation. It trades about 0.38 of its potential returns per unit of risk. Federated Hermes Inflation is currently generating about 0.06 per unit of risk. If you would invest 6,789 in Citigroup on April 25, 2025 and sell it today you would earn a total of 2,750 from holding Citigroup or generate 40.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Citigroup vs. Federated Hermes Inflation
Performance |
| Timeline |
| Citigroup |
| Federated Hermes Inf |
Citigroup and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Federated Hermes
The main advantage of trading using opposite Citigroup and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| Citigroup vs. Bank of America | Citigroup vs. Wells Fargo | Citigroup vs. JPMorgan Chase Co | Citigroup vs. Toronto Dominion Bank |
| Federated Hermes vs. Ashmore Emerging Markets | Federated Hermes vs. Putnam Money Market | Federated Hermes vs. Plan Investment | Federated Hermes vs. Prudential Government Money |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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