Correlation Between Citigroup and Strats Trust

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

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

Diversification Opportunities for Citigroup and Strats Trust

0.37

Correlation Coefficient

Citigroup  Strats Trust

Weak diversification

The 3 months correlation between Citigroup and Strats is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Strats Trust Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats Trust Cellular 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 Strats Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats Trust Cellular has no effect on the direction of Citigroup i.e., Citigroup and Strats Trust go up and down completely randomly.

Pair Corralation between Citigroup and Strats Trust

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.59 times more return on investment than Strats Trust. However, Citigroup is 3.59 times more volatile than Strats Trust Cellular. It trades about 0.12 of its potential returns per unit of risk. Strats Trust Cellular is currently generating about 0.14 per unit of risk. If you would invest  6,092  in Citigroup on August 31, 2024 and sell it today you would earn a total of  924.00  from holding Citigroup or generate 15.17% return on investment over 90 days.

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

Citigroup  vs.  Strats Trust Cellular

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 unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Strats Trust Cellular

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strats Trust Cellular are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking indicators, Strats Trust is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citigroup and Strats Trust

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

The idea behind Citigroup and Strats Trust Cellular 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.