Correlation Between Citigroup and Coroware

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

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

Diversification Opportunities for Citigroup and Coroware

0.21

Correlation Coefficient

Citigroup  Coroware

Modest diversification

The 3 months correlation between Citigroup and Coroware is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Coroware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coroware 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 Coroware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coroware has no effect on the direction of Citigroup i.e., Citigroup and Coroware go up and down completely randomly.

Pair Corralation between Citigroup and Coroware

Taking into account the 90-day investment horizon Citigroup is expected to generate 485.83 times less return on investment than Coroware. But when comparing it to its historical volatility, Citigroup is 204.04 times less risky than Coroware. It trades about 0.17 of its potential returns per unit of risk. Coroware is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Coroware on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Coroware or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  Coroware

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.

Coroware

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Coroware are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Coroware demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Coroware

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

The idea behind Citigroup and Coroware 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.