Correlation Between Citigroup and Grayscale Chainlink

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

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

Diversification Opportunities for Citigroup and Grayscale Chainlink

0.56

Correlation Coefficient

Citigroup  Grayscale Chainlink

Very weak diversification

The 3 months correlation between Citigroup and Grayscale is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Grayscale Chainlink Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Chainlink Trust 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 Grayscale Chainlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Chainlink Trust has no effect on the direction of Citigroup i.e., Citigroup and Grayscale Chainlink go up and down completely randomly.

Pair Corralation between Citigroup and Grayscale Chainlink

Taking into account the 90-day investment horizon Citigroup is expected to generate 21.18 times less return on investment than Grayscale Chainlink. But when comparing it to its historical volatility, Citigroup is 13.68 times less risky than Grayscale Chainlink. It trades about 0.23 of its potential returns per unit of risk. Grayscale Chainlink Trust is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  6,700  in Grayscale Chainlink Trust on September 20, 2024 and sell it today you would earn a total of  6,298  from holding Grayscale Chainlink Trust or generate 94.0% return on investment over 90 days.

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

Citigroup  vs.  Grayscale Chainlink Trust

Citigroup

Risk-Adjusted Performance

10 of 100

Modest

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

Grayscale Chainlink Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Chainlink Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Grayscale Chainlink disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Grayscale Chainlink

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

The idea behind Citigroup and Grayscale Chainlink Trust 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.