Correlation Between Citigroup and Cai Lay

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

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

Diversification Opportunities for Citigroup and Cai Lay

-0.1

Correlation Coefficient

Citigroup  Cai Lay

Good diversification

The 3 months correlation between Citigroup and Cai is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cai Lay Veterinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cai Lay Veterinary 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 Cai Lay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cai Lay Veterinary has no effect on the direction of Citigroup i.e., Citigroup and Cai Lay go up and down completely randomly.

Pair Corralation between Citigroup and Cai Lay

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.65 times more return on investment than Cai Lay. However, Citigroup is 1.55 times less risky than Cai Lay. It trades about 0.06 of its potential returns per unit of risk. Cai Lay Veterinary is currently generating about 0.02 per unit of risk. If you would invest  6,227  in Citigroup on September 29, 2024 and sell it today you would earn a total of  873.00  from holding Citigroup or generate 14.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.56%
Values	Daily Returns

Citigroup  vs.  Cai Lay Veterinary

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.

Cai Lay Veterinary

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cai Lay Veterinary are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cai Lay displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Cai Lay

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

The idea behind Citigroup and Cai Lay Veterinary 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.