Correlation Between Citigroup and Verde Bio

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

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

Diversification Opportunities for Citigroup and Verde Bio

0.0

Correlation Coefficient

Citigroup  Verde Bio

Pay attention - limited upside

The 3 months correlation between Citigroup and Verde is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Verde Bio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verde Bio Holdings 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 Verde Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verde Bio Holdings has no effect on the direction of Citigroup i.e., Citigroup and Verde Bio go up and down completely randomly.

Pair Corralation between Citigroup and Verde Bio

If you would invest  6,900  in Citigroup on September 17, 2024 and sell it today you would earn a total of  249.00  from holding Citigroup or generate 3.61% return on investment over 90 days.

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

Citigroup  vs.  Verde Bio Holdings

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Verde Bio Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verde Bio Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Verde Bio is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Verde Bio

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

The idea behind Citigroup and Verde Bio Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.