Correlation Between Citigroup and Hub24

Can any of the company-specific risk be diversified away by investing in both Citigroup and Hub24 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 Hub24 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and Hub24, you can compare the effects of market volatilities on Citigroup and Hub24 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 Hub24. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Hub24.

Diversification Opportunities for Citigroup and Hub24

0.84

Correlation Coefficient

Citigroup  Hub24

Very poor diversification

The 3 months correlation between Citigroup and Hub24 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hub24 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub24 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 Hub24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub24 has no effect on the direction of Citigroup i.e., Citigroup and Hub24 go up and down completely randomly.

Pair Corralation between Citigroup and Hub24

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.09 times less return on investment than Hub24. In addition to that, Citigroup is 1.21 times more volatile than Hub24. It trades about 0.1 of its total potential returns per unit of risk. Hub24 is currently generating about 0.25 per unit of volatility. If you would invest  5,706  in Hub24 on September 20, 2024 and sell it today you would earn a total of  1,538  from holding Hub24 or generate 26.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  Hub24

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.

Hub24

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hub24 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Hub24 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Hub24

The main advantage of trading using opposite Citigroup and Hub24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Hub24 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 Hub24 will offset losses from the drop in Hub24's long position.

The idea behind Citigroup and Hub24 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.