Correlation Between Citigroup and TTW Public

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

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

Diversification Opportunities for Citigroup and TTW Public

-0.53

Correlation Coefficient

Citigroup  TTW Public

Excellent diversification

The 3 months correlation between Citigroup and TTW is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and TTW Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTW Public 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 TTW Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTW Public has no effect on the direction of Citigroup i.e., Citigroup and TTW Public go up and down completely randomly.

Pair Corralation between Citigroup and TTW Public

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.8 times more return on investment than TTW Public. However, Citigroup is 1.25 times less risky than TTW Public. It trades about 0.07 of its potential returns per unit of risk. TTW Public is currently generating about 0.01 per unit of risk. If you would invest  4,219  in Citigroup on September 23, 2024 and sell it today you would earn a total of  2,700  from holding Citigroup or generate 64.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.03%
Values	Daily Returns

Citigroup  vs.  TTW Public

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TTW Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TTW Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TTW Public is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and TTW Public

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

The idea behind Citigroup and TTW 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..