Correlation Between Citigroup and LiveWire

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

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

Diversification Opportunities for Citigroup and LiveWire

-0.25

Correlation Coefficient

Citigroup  LiveWire

Very good diversification

The 3 months correlation between Citigroup and LiveWire is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LiveWire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveWire Group 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 LiveWire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveWire Group has no effect on the direction of Citigroup i.e., Citigroup and LiveWire go up and down completely randomly.

Pair Corralation between Citigroup and LiveWire

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.52 times more return on investment than LiveWire. However, Citigroup is 1.92 times less risky than LiveWire. It trades about 0.16 of its potential returns per unit of risk. LiveWire Group is currently generating about -0.12 per unit of risk. If you would invest  6,360  in Citigroup on September 26, 2024 and sell it today you would earn a total of  740.00  from holding Citigroup or generate 11.64% return on investment over 90 days.

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

Citigroup  vs.  LiveWire Group

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.

LiveWire Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LiveWire Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Citigroup and LiveWire

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

The idea behind Citigroup and LiveWire Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.