Correlation Between Citigroup and Infimer

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

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

Diversification Opportunities for Citigroup and Infimer

0.11

Correlation Coefficient

Citigroup  Infimer

Average diversification

The 3 months correlation between Citigroup and Infimer is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Infimer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infimer 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 Infimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infimer has no effect on the direction of Citigroup i.e., Citigroup and Infimer go up and down completely randomly.

Pair Corralation between Citigroup and Infimer

Taking into account the 90-day investment horizon Citigroup is expected to generate 370.8 times less return on investment than Infimer. But when comparing it to its historical volatility, Citigroup is 182.0 times less risky than Infimer. It trades about 0.18 of its potential returns per unit of risk. Infimer is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  4,700  in Infimer on September 16, 2024 and sell it today you would earn a total of  2,084,300  from holding Infimer or generate 44346.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	72.31%
Values	Daily Returns

Citigroup  vs.  Infimer

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Infimer

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Infimer are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Infimer sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Infimer

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

The idea behind Citigroup and Infimer 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.