Correlation Between Citigroup and Bion Environmental

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

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

Diversification Opportunities for Citigroup and Bion Environmental

0.27

Correlation Coefficient

Citigroup  Bion Environmental

Modest diversification

The 3 months correlation between Citigroup and Bion is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Bion Environmental Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bion Environmental 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 Bion Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bion Environmental has no effect on the direction of Citigroup i.e., Citigroup and Bion Environmental go up and down completely randomly.

Pair Corralation between Citigroup and Bion Environmental

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.21 times more return on investment than Bion Environmental. However, Citigroup is 4.72 times less risky than Bion Environmental. It trades about 0.07 of its potential returns per unit of risk. Bion Environmental Technologies is currently generating about 0.0 per unit of risk. If you would invest  4,218  in Citigroup on September 2, 2024 and sell it today you would earn a total of  2,869  from holding Citigroup or generate 68.02% return on investment over 90 days.

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

Citigroup  vs.  Bion Environmental Technologie

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.

Bion Environmental

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bion Environmental Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Bion Environmental unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Bion Environmental

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

The idea behind Citigroup and Bion Environmental Technologies 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.