Correlation Between Citigroup and Cbd Life

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

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

Diversification Opportunities for Citigroup and Cbd Life

-0.38

Correlation Coefficient

Citigroup  Cbd Life

Very good diversification

The 3 months correlation between Citigroup and Cbd is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cbd Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cbd Life Sciences 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 Cbd Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cbd Life Sciences has no effect on the direction of Citigroup i.e., Citigroup and Cbd Life go up and down completely randomly.

Pair Corralation between Citigroup and Cbd Life

Taking into account the 90-day investment horizon Citigroup is expected to generate 8.0 times less return on investment than Cbd Life. But when comparing it to its historical volatility, Citigroup is 13.99 times less risky than Cbd Life. It trades about 0.14 of its potential returns per unit of risk. Cbd Life Sciences is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.07  in Cbd Life Sciences on September 20, 2024 and sell it today you would lose (0.02) from holding Cbd Life Sciences or give up 28.57% of portfolio value over 90 days.

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

Citigroup  vs.  Cbd Life Sciences

Citigroup

Risk-Adjusted Performance

10 of 100

Modest

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.

Cbd Life Sciences

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cbd Life Sciences are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Cbd Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Cbd Life

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

The idea behind Citigroup and Cbd Life Sciences 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.