Correlation Between Citigroup and Levinstein Eng

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

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

Diversification Opportunities for Citigroup and Levinstein Eng

0.89

Correlation Coefficient

Citigroup  Levinstein Eng

Very poor diversification

The 3 months correlation between Citigroup and Levinstein is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Levinstein Eng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levinstein Eng 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 Levinstein Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levinstein Eng has no effect on the direction of Citigroup i.e., Citigroup and Levinstein Eng go up and down completely randomly.

Pair Corralation between Citigroup and Levinstein Eng

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.78 times less return on investment than Levinstein Eng. But when comparing it to its historical volatility, Citigroup is 1.11 times less risky than Levinstein Eng. It trades about 0.06 of its potential returns per unit of risk. Levinstein Eng is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,583,656  in Levinstein Eng on September 29, 2024 and sell it today you would earn a total of  1,385,344  from holding Levinstein Eng or generate 53.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	77.78%
Values	Daily Returns

Citigroup  vs.  Levinstein Eng

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Levinstein Eng

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Levinstein Eng are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Levinstein Eng sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Levinstein Eng

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

The idea behind Citigroup and Levinstein Eng 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.