Correlation Between Citigroup and Globe Life

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

By analyzing existing cross correlation between Citigroup and Globe Life 425, you can compare the effects of market volatilities on Citigroup and Globe Life 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 Globe Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Globe Life.

Diversification Opportunities for Citigroup and Globe Life

-0.8

Correlation Coefficient

Citigroup  Globe Life

Pay attention - limited upside

The 3 months correlation between Citigroup and Globe is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Globe Life 425 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Life 425 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 Globe Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Life 425 has no effect on the direction of Citigroup i.e., Citigroup and Globe Life go up and down completely randomly.

Pair Corralation between Citigroup and Globe Life

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.51 times more return on investment than Globe Life. However, Citigroup is 1.51 times more volatile than Globe Life 425. It trades about 0.09 of its potential returns per unit of risk. Globe Life 425 is currently generating about -0.11 per unit of risk. If you would invest  6,203  in Citigroup on September 21, 2024 and sell it today you would earn a total of  639.00  from holding Citigroup or generate 10.3% return on investment over 90 days.

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

Citigroup  vs.  Globe Life 425

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 unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Globe Life 425

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Life 425 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Preferred Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Citigroup and Globe Life

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

The idea behind Citigroup and Globe Life 425 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.