Correlation Between Citigroup and KLP AksjeNorge

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

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

Diversification Opportunities for Citigroup and KLP AksjeNorge

0.56

Correlation Coefficient

Citigroup  KLP AksjeNorge

Very weak diversification

The 3 months correlation between Citigroup and KLP is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and KLP AksjeNorge Indeks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLP AksjeNorge Indeks 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 KLP AksjeNorge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLP AksjeNorge Indeks has no effect on the direction of Citigroup i.e., Citigroup and KLP AksjeNorge go up and down completely randomly.

Pair Corralation between Citigroup and KLP AksjeNorge

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.74 times more return on investment than KLP AksjeNorge. However, Citigroup is 2.74 times more volatile than KLP AksjeNorge Indeks. It trades about 0.12 of its potential returns per unit of risk. KLP AksjeNorge Indeks is currently generating about 0.06 per unit of risk. If you would invest  6,247  in Citigroup on September 19, 2024 and sell it today you would earn a total of  865.00  from holding Citigroup or generate 13.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  KLP AksjeNorge Indeks

Citigroup

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

KLP AksjeNorge Indeks

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KLP AksjeNorge Indeks are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong technical indicators, KLP AksjeNorge is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citigroup and KLP AksjeNorge

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

The idea behind Citigroup and KLP AksjeNorge Indeks 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.