Correlation Between Citigroup and Charlton Aria

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

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

Diversification Opportunities for Citigroup and Charlton Aria

-0.61

Correlation Coefficient

Citigroup  Charlton Aria

Excellent diversification

The 3 months correlation between Citigroup and Charlton is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Charlton Aria Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charlton Aria Acquisition 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 Charlton Aria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charlton Aria Acquisition has no effect on the direction of Citigroup i.e., Citigroup and Charlton Aria go up and down completely randomly.

Pair Corralation between Citigroup and Charlton Aria

Taking into account the 90-day investment horizon Citigroup is expected to generate 20.32 times more return on investment than Charlton Aria. However, Citigroup is 20.32 times more volatile than Charlton Aria Acquisition. It trades about 0.18 of its potential returns per unit of risk. Charlton Aria Acquisition is currently generating about 0.38 per unit of risk. If you would invest  5,788  in Citigroup on September 15, 2024 and sell it today you would earn a total of  1,313  from holding Citigroup or generate 22.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	21.88%
Values	Daily Returns

Citigroup  vs.  Charlton Aria Acquisition

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.

Charlton Aria Acquisition

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Charlton Aria Acquisition are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Charlton Aria is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citigroup and Charlton Aria

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

The idea behind Citigroup and Charlton Aria Acquisition 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.