Correlation Between Citigroup and Boston Scientific

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

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

Diversification Opportunities for Citigroup and Boston Scientific

0.88

Correlation Coefficient

Citigroup  Boston Scientific

Very poor diversification

The 3 months correlation between Citigroup and Boston is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Boston Scientific Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Scientific Corp 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 Boston Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Scientific Corp has no effect on the direction of Citigroup i.e., Citigroup and Boston Scientific go up and down completely randomly.

Pair Corralation between Citigroup and Boston Scientific

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.71 times more return on investment than Boston Scientific. However, Citigroup is 1.71 times more volatile than Boston Scientific Corp. It trades about 0.09 of its potential returns per unit of risk. Boston Scientific Corp is currently generating about 0.09 per unit of risk. If you would invest  6,203  in Citigroup on September 21, 2024 and sell it today you would earn a total of  639.00  from holding Citigroup or generate 10.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.92%
Values	Daily Returns

Citigroup  vs.  Boston Scientific Corp

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Boston Scientific Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Scientific Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Boston Scientific is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and Boston Scientific

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

The idea behind Citigroup and Boston Scientific Corp 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..