Correlation Between Citigroup and Betsson AB

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

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

Diversification Opportunities for Citigroup and Betsson AB

0.8

Correlation Coefficient

Citigroup  Betsson AB

Very poor diversification

The 3 months correlation between Citigroup and Betsson is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Betsson AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betsson AB 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 Betsson AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betsson AB has no effect on the direction of Citigroup i.e., Citigroup and Betsson AB go up and down completely randomly.

Pair Corralation between Citigroup and Betsson AB

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.78 times more return on investment than Betsson AB. However, Citigroup is 1.78 times more volatile than Betsson AB. It trades about 0.27 of its potential returns per unit of risk. Betsson AB is currently generating about -0.06 per unit of risk. If you would invest  6,315  in Citigroup on September 2, 2024 and sell it today you would earn a total of  772.00  from holding Citigroup or generate 12.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Betsson AB

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Betsson AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Betsson AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Betsson AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Betsson AB

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

The idea behind Citigroup and Betsson AB 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..