Correlation Between Citigroup and American Picture

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

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

Diversification Opportunities for Citigroup and American Picture

0.41

Correlation Coefficient

Citigroup  American Picture

Very weak diversification

The 3 months correlation between Citigroup and American is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and American Picture House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Picture House 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 American Picture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Picture House has no effect on the direction of Citigroup i.e., Citigroup and American Picture go up and down completely randomly.

Pair Corralation between Citigroup and American Picture

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.0 times less return on investment than American Picture. But when comparing it to its historical volatility, Citigroup is 2.43 times less risky than American Picture. It trades about 0.12 of its potential returns per unit of risk. American Picture House is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  23.00  in American Picture House on August 31, 2024 and sell it today you would earn a total of  2.00  from holding American Picture House or generate 8.7% return on investment over 90 days.

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

Citigroup  vs.  American Picture House

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

American Picture House

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Picture House are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical indicators, American Picture reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and American Picture

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

The idea behind Citigroup and American Picture House 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 Transaction History module to view history of all your transactions and understand their impact on performance.