Correlation Between Citigroup and Britania PCL

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

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

Diversification Opportunities for Citigroup and Britania PCL

-0.89

Correlation Coefficient

Citigroup  Britania PCL

Pay attention - limited upside

The 3 months correlation between Citigroup and Britania is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Britania PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Britania PCL 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 Britania PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Britania PCL has no effect on the direction of Citigroup i.e., Citigroup and Britania PCL go up and down completely randomly.

Pair Corralation between Citigroup and Britania PCL

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.87 times more return on investment than Britania PCL. However, Citigroup is 1.14 times less risky than Britania PCL. It trades about 0.01 of its potential returns per unit of risk. Britania PCL is currently generating about -0.39 per unit of risk. If you would invest  7,087  in Citigroup on September 30, 2024 and sell it today you would earn a total of  13.00  from holding Citigroup or generate 0.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Britania PCL

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

Britania PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Britania PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Citigroup and Britania PCL

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

The idea behind Citigroup and Britania PCL 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .