Correlation Between Citigroup and UNIQA Insurance

Can any of the company-specific risk be diversified away by investing in both Citigroup and UNIQA Insurance 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 UNIQA Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and UNIQA Insurance Group, you can compare the effects of market volatilities on Citigroup and UNIQA Insurance 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 UNIQA Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and UNIQA Insurance.

Diversification Opportunities for Citigroup and UNIQA Insurance

-0.1

Correlation Coefficient

Citigroup  UNIQA Insurance

Good diversification

The 3 months correlation between Citigroup and UNIQA is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and UNIQA Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQA Insurance Group 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 UNIQA Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIQA Insurance Group has no effect on the direction of Citigroup i.e., Citigroup and UNIQA Insurance go up and down completely randomly.

Pair Corralation between Citigroup and UNIQA Insurance

Assuming the 90 days trading horizon Citigroup is expected to generate 2.02 times more return on investment than UNIQA Insurance. However, Citigroup is 2.02 times more volatile than UNIQA Insurance Group. It trades about 0.14 of its potential returns per unit of risk. UNIQA Insurance Group is currently generating about 0.07 per unit of risk. If you would invest  5,976  in Citigroup on September 25, 2024 and sell it today you would earn a total of  984.00  from holding Citigroup or generate 16.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  UNIQA Insurance Group

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Citigroup unveiled solid returns over the last few months and may actually be approaching a breakup point.

UNIQA Insurance Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UNIQA Insurance Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, UNIQA Insurance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and UNIQA Insurance

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

The idea behind Citigroup and UNIQA Insurance Group 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.