Correlation Between Citigroup and Cal Comp

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

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

Diversification Opportunities for Citigroup and Cal Comp

0.9

Correlation Coefficient

Citigroup  Cal Comp

Almost no diversification

The 3 months correlation between Citigroup and Cal is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cal Comp Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Comp Electronics 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 Cal Comp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Comp Electronics has no effect on the direction of Citigroup i.e., Citigroup and Cal Comp go up and down completely randomly.

Pair Corralation between Citigroup and Cal Comp

Taking into account the 90-day investment horizon Citigroup is expected to generate 5.18 times less return on investment than Cal Comp. But when comparing it to its historical volatility, Citigroup is 3.12 times less risky than Cal Comp. It trades about 0.18 of its potential returns per unit of risk. Cal Comp Electronics Public is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  366.00  in Cal Comp Electronics Public on September 16, 2024 and sell it today you would earn a total of  589.00  from holding Cal Comp Electronics Public or generate 160.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.38%
Values	Daily Returns

Citigroup  vs.  Cal Comp Electronics Public

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Cal Comp Electronics

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cal Comp Electronics Public are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Cal Comp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Cal Comp

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

The idea behind Citigroup and Cal Comp Electronics Public 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..