Correlation Between Citigroup and Weblink International

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

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

Diversification Opportunities for Citigroup and Weblink International

0.67

Correlation Coefficient

Citigroup  Weblink International

Poor diversification

The 3 months correlation between Citigroup and Weblink is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Weblink International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weblink International 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 Weblink International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weblink International has no effect on the direction of Citigroup i.e., Citigroup and Weblink International go up and down completely randomly.

Pair Corralation between Citigroup and Weblink International

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.32 times more return on investment than Weblink International. However, Citigroup is 1.32 times more volatile than Weblink International. It trades about 0.06 of its potential returns per unit of risk. Weblink International is currently generating about 0.0 per unit of risk. If you would invest  6,022  in Citigroup on September 21, 2024 and sell it today you would earn a total of  820.00  from holding Citigroup or generate 13.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  Weblink International

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.

Weblink International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Weblink International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Weblink International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citigroup and Weblink International

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

The idea behind Citigroup and Weblink International 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.