Correlation Between Citigroup and LG Gerd

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

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

Diversification Opportunities for Citigroup and LG Gerd

0.94

Correlation Coefficient

Citigroup  LG Gerd

Almost no diversification

The 3 months correlation between Citigroup and GERD is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LG Gerd Kommer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Gerd Kommer 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 LG Gerd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Gerd Kommer has no effect on the direction of Citigroup i.e., Citigroup and LG Gerd go up and down completely randomly.

Pair Corralation between Citigroup and LG Gerd

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.68 times more return on investment than LG Gerd. However, Citigroup is 2.68 times more volatile than LG Gerd Kommer. It trades about 0.14 of its potential returns per unit of risk. LG Gerd Kommer is currently generating about 0.11 per unit of risk. If you would invest  6,117  in Citigroup on September 26, 2024 and sell it today you would earn a total of  983.00  from holding Citigroup or generate 16.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  LG Gerd Kommer

Citigroup

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

LG Gerd Kommer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LG Gerd Kommer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, LG Gerd is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and LG Gerd

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

The idea behind Citigroup and LG Gerd Kommer 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.