Correlation Between Citigroup and 456680

Can any of the company-specific risk be diversified away by investing in both Citigroup and 456680 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 456680 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and 456680, you can compare the effects of market volatilities on Citigroup and 456680 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 456680. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 456680.

Diversification Opportunities for Citigroup and 456680

0.52

Correlation Coefficient

Citigroup  456680

Very weak diversification

The 3 months correlation between Citigroup and 456680 is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and 456680 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 456680 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 456680. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 456680 has no effect on the direction of Citigroup i.e., Citigroup and 456680 go up and down completely randomly.

Pair Corralation between Citigroup and 456680

Taking into account the 90-day investment horizon Citigroup is expected to generate 5.62 times less return on investment than 456680. But when comparing it to its historical volatility, Citigroup is 2.77 times less risky than 456680. It trades about 0.1 of its potential returns per unit of risk. 456680 is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  343,000  in 456680 on September 23, 2024 and sell it today you would earn a total of  265,500  from holding 456680 or generate 77.41% return on investment over 90 days.

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

Citigroup  vs.  456680

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 uncertain fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

456680

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 456680 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 456680 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and 456680

The main advantage of trading using opposite Citigroup and 456680 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 456680 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 456680 will offset losses from the drop in 456680's long position.

The idea behind Citigroup and 456680 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.