Correlation Between Citigroup and Perkins Mid

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

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

Diversification Opportunities for Citigroup and Perkins Mid

0.04

Correlation Coefficient

Citigroup  Perkins Mid

Significant diversification

The 3 months correlation between Citigroup and Perkins is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Perkins Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perkins Mid Cap 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 Perkins Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perkins Mid Cap has no effect on the direction of Citigroup i.e., Citigroup and Perkins Mid go up and down completely randomly.

Pair Corralation between Citigroup and Perkins Mid

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.29 times more return on investment than Perkins Mid. However, Citigroup is 1.29 times more volatile than Perkins Mid Cap. It trades about 0.13 of its potential returns per unit of risk. Perkins Mid Cap is currently generating about -0.1 per unit of risk. If you would invest  5,985  in Citigroup on September 25, 2024 and sell it today you would earn a total of  934.00  from holding Citigroup or generate 15.61% return on investment over 90 days.

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

Citigroup  vs.  Perkins Mid Cap

Citigroup

Risk-Adjusted Performance

10 of 100

OK

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

Perkins Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perkins Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Citigroup and Perkins Mid

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

The idea behind Citigroup and Perkins Mid Cap 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.