Correlation Between Citigroup and Batm Advanced

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

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

Diversification Opportunities for Citigroup and Batm Advanced

-0.56

Correlation Coefficient

Citigroup  Batm Advanced

Excellent diversification

The 3 months correlation between Citigroup and Batm is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Batm Advanced Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batm Advanced Commun 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 Batm Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batm Advanced Commun has no effect on the direction of Citigroup i.e., Citigroup and Batm Advanced go up and down completely randomly.

Pair Corralation between Citigroup and Batm Advanced

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.55 times more return on investment than Batm Advanced. However, Citigroup is 1.83 times less risky than Batm Advanced. It trades about 0.15 of its potential returns per unit of risk. Batm Advanced Communications is currently generating about -0.07 per unit of risk. If you would invest  6,205  in Citigroup on August 31, 2024 and sell it today you would earn a total of  811.00  from holding Citigroup or generate 13.07% 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.  Batm Advanced Communications

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.

Batm Advanced Commun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Batm Advanced Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Citigroup and Batm Advanced

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

The idea behind Citigroup and Batm Advanced Communications 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.