Correlation Between Citigroup and Bon Natural

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

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

Diversification Opportunities for Citigroup and Bon Natural

-0.42

Correlation Coefficient

Citigroup  Bon Natural

Very good diversification

The 3 months correlation between Citigroup and Bon is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Bon Natural Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bon Natural Life 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 Bon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bon Natural Life has no effect on the direction of Citigroup i.e., Citigroup and Bon Natural go up and down completely randomly.

Pair Corralation between Citigroup and Bon Natural

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.4 times more return on investment than Bon Natural. However, Citigroup is 2.5 times less risky than Bon Natural. It trades about 0.07 of its potential returns per unit of risk. Bon Natural Life is currently generating about -0.03 per unit of risk. If you would invest  6,079  in Citigroup on August 30, 2024 and sell it today you would earn a total of  937.00  from holding Citigroup or generate 15.41% return on investment over 90 days.

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

Citigroup  vs.  Bon Natural Life

Citigroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) 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.

Bon Natural Life

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bon Natural Life are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Bon Natural may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Citigroup and Bon Natural

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

The idea behind Citigroup and Bon Natural Life 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.