Correlation Between Citigroup and Catalyst Insider

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

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

Diversification Opportunities for Citigroup and Catalyst Insider

0.93

Correlation Coefficient

Citigroup  Catalyst Insider

Almost no diversification

The 3 months correlation between Citigroup and Catalyst is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Catalyst Insider Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Insider Income 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 Catalyst Insider. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Insider Income has no effect on the direction of Citigroup i.e., Citigroup and Catalyst Insider go up and down completely randomly.

Pair Corralation between Citigroup and Catalyst Insider

Taking into account the 90-day investment horizon Citigroup is expected to generate 18.17 times more return on investment than Catalyst Insider. However, Citigroup is 18.17 times more volatile than Catalyst Insider Income. It trades about 0.15 of its potential returns per unit of risk. Catalyst Insider Income is currently generating about 0.36 per unit of risk. If you would invest  6,010  in Citigroup on September 5, 2024 and sell it today you would earn a total of  1,132  from holding Citigroup or generate 18.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  Catalyst Insider Income

Citigroup

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

Catalyst Insider Income

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Insider Income are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Catalyst Insider is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Catalyst Insider

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

The idea behind Citigroup and Catalyst Insider Income 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.