Correlation Between Citigroup and Oklahoma College

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

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

Diversification Opportunities for Citigroup and Oklahoma College

0.88

Correlation Coefficient

Citigroup  Oklahoma College

Very poor diversification

The 3 months correlation between Citigroup and Oklahoma is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Oklahoma College Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma College Savings 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 Oklahoma College. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma College Savings has no effect on the direction of Citigroup i.e., Citigroup and Oklahoma College go up and down completely randomly.

Pair Corralation between Citigroup and Oklahoma College

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.2 times more return on investment than Oklahoma College. However, Citigroup is 1.2 times more volatile than Oklahoma College Savings. It trades about 0.05 of its potential returns per unit of risk. Oklahoma College Savings is currently generating about 0.01 per unit of risk. If you would invest  7,016  in Citigroup on September 28, 2024 and sell it today you would earn a total of  84.00  from holding Citigroup or generate 1.2% return on investment over 90 days.

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

Citigroup  vs.  Oklahoma College Savings

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Oklahoma College Savings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oklahoma College Savings are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Oklahoma College is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Oklahoma College

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

The idea behind Citigroup and Oklahoma College Savings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.