Correlation Between Citigroup and CTR Investments

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

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

Diversification Opportunities for Citigroup and CTR Investments

-0.85

Correlation Coefficient

Citigroup  CTR Investments

Pay attention - limited upside

The 3 months correlation between Citigroup and CTR is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CTR Investments Consulting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTR Investments Cons 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 CTR Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTR Investments Cons has no effect on the direction of Citigroup i.e., Citigroup and CTR Investments go up and down completely randomly.

Pair Corralation between Citigroup and CTR Investments

Taking into account the 90-day investment horizon Citigroup is expected to generate 15.99 times less return on investment than CTR Investments. But when comparing it to its historical volatility, Citigroup is 13.12 times less risky than CTR Investments. It trades about 0.06 of its potential returns per unit of risk. CTR Investments Consulting is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.08  in CTR Investments Consulting on September 27, 2024 and sell it today you would lose (0.06) from holding CTR Investments Consulting or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Citigroup  vs.  CTR Investments Consulting

Citigroup

Risk-Adjusted Performance

10 of 100

OK

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

CTR Investments Cons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTR Investments Consulting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Citigroup and CTR Investments

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

The idea behind Citigroup and CTR Investments Consulting 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.