Correlation Between Citigroup and SVENSKA AEROGEL

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

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

Diversification Opportunities for Citigroup and SVENSKA AEROGEL

0.22

Correlation Coefficient

Citigroup  SVENSKA AEROGEL

Modest diversification

The 3 months correlation between Citigroup and SVENSKA is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SVENSKA AEROGEL HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVENSKA AEROGEL HOLDING 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 SVENSKA AEROGEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVENSKA AEROGEL HOLDING has no effect on the direction of Citigroup i.e., Citigroup and SVENSKA AEROGEL go up and down completely randomly.

Pair Corralation between Citigroup and SVENSKA AEROGEL

Taking into account the 90-day investment horizon Citigroup is expected to generate 558.65 times less return on investment than SVENSKA AEROGEL. But when comparing it to its historical volatility, Citigroup is 192.75 times less risky than SVENSKA AEROGEL. It trades about 0.12 of its potential returns per unit of risk. SVENSKA AEROGEL HOLDING is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  63.00  in SVENSKA AEROGEL HOLDING on September 30, 2024 and sell it today you would lose (12.00) from holding SVENSKA AEROGEL HOLDING or give up 19.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Citigroup  vs.  SVENSKA AEROGEL HOLDING

Citigroup

Risk-Adjusted Performance

9 of 100

OK

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

SVENSKA AEROGEL HOLDING

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SVENSKA AEROGEL HOLDING are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SVENSKA AEROGEL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and SVENSKA AEROGEL

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

The idea behind Citigroup and SVENSKA AEROGEL HOLDING 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.