Correlation Between Citigroup and Digital Transformation

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

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

Diversification Opportunities for Citigroup and Digital Transformation

0.72

Correlation Coefficient

Citigroup  Digital Transformation

Poor diversification

The 3 months correlation between Citigroup and Digital is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Digital Transformation Opportu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Transformation 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 Digital Transformation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Transformation has no effect on the direction of Citigroup i.e., Citigroup and Digital Transformation go up and down completely randomly.

Pair Corralation between Citigroup and Digital Transformation

If you would invest  5,788  in Citigroup on September 16, 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 Together
Strength	Significant
Accuracy	1.54%
Values	Daily Returns

Citigroup  vs.  Digital Transformation Opportu

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.

Digital Transformation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital Transformation Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Digital Transformation is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citigroup and Digital Transformation

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

The idea behind Citigroup and Digital Transformation Opportunities 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.