Correlation Between Citigroup and FansUnite Entertainment

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

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

Diversification Opportunities for Citigroup and FansUnite Entertainment

-0.24

Correlation Coefficient

Citigroup  FansUnite Entertainment

Very good diversification

The 3 months correlation between Citigroup and FansUnite is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and FansUnite Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FansUnite Entertainment 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 FansUnite Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FansUnite Entertainment has no effect on the direction of Citigroup i.e., Citigroup and FansUnite Entertainment go up and down completely randomly.

Pair Corralation between Citigroup and FansUnite Entertainment

Taking into account the 90-day investment horizon Citigroup is expected to generate 100.1 times less return on investment than FansUnite Entertainment. But when comparing it to its historical volatility, Citigroup is 80.5 times less risky than FansUnite Entertainment. It trades about 0.18 of its potential returns per unit of risk. FansUnite Entertainment is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.10  in FansUnite Entertainment on September 14, 2024 and sell it today you would lose (0.08) from holding FansUnite Entertainment or give up 80.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  FansUnite Entertainment

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.

FansUnite Entertainment

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FansUnite Entertainment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, FansUnite Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and FansUnite Entertainment

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

The idea behind Citigroup and FansUnite Entertainment 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.