Correlation Between Citigroup and KWESST MICRO

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

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

Diversification Opportunities for Citigroup and KWESST MICRO

-0.16

Correlation Coefficient

Citigroup  KWESST MICRO

Good diversification

The 3 months correlation between Citigroup and KWESST is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and KWESST MICRO SYSINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KWESST MICRO SYSINC 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 KWESST MICRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KWESST MICRO SYSINC has no effect on the direction of Citigroup i.e., Citigroup and KWESST MICRO go up and down completely randomly.

Pair Corralation between Citigroup and KWESST MICRO

Taking into account the 90-day investment horizon Citigroup is expected to generate 52.88 times less return on investment than KWESST MICRO. But when comparing it to its historical volatility, Citigroup is 63.25 times less risky than KWESST MICRO. It trades about 0.12 of its potential returns per unit of risk. KWESST MICRO SYSINC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  70.00  in KWESST MICRO SYSINC on September 19, 2024 and sell it today you would lose (14.00) from holding KWESST MICRO SYSINC or give up 20.0% of portfolio value over 90 days.

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

Citigroup  vs.  KWESST MICRO SYSINC

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.

KWESST MICRO SYSINC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KWESST MICRO SYSINC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KWESST MICRO reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and KWESST MICRO

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

The idea behind Citigroup and KWESST MICRO SYSINC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.