Correlation Between Citigroup and Hardwoods Distribution

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

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

Diversification Opportunities for Citigroup and Hardwoods Distribution

0.0

Correlation Coefficient

Citigroup  Hardwoods Distribution

Pay attention - limited upside

The 3 months correlation between Citigroup and Hardwoods is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hardwoods Distribution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardwoods Distribution 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 Hardwoods Distribution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardwoods Distribution has no effect on the direction of Citigroup i.e., Citigroup and Hardwoods Distribution go up and down completely randomly.

Pair Corralation between Citigroup and Hardwoods Distribution

If you would invest  6,159  in Citigroup on September 20, 2024 and sell it today you would earn a total of  953.00  from holding Citigroup or generate 15.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Citigroup  vs.  Hardwoods Distribution

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.

Hardwoods Distribution

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hardwoods Distribution has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Hardwoods Distribution is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citigroup and Hardwoods Distribution

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

The idea behind Citigroup and Hardwoods Distribution 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.