Correlation Between Citigroup and Great-west Conservative

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

By analyzing existing cross correlation between Citigroup and Great West Servative Profile, you can compare the effects of market volatilities on Citigroup and Great-west Conservative 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 Great-west Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Great-west Conservative.

Diversification Opportunities for Citigroup and Great-west Conservative

0.14

Correlation Coefficient

Citigroup  Great-west Conservative

Average diversification

The 3 months correlation between Citigroup and Great-west is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Great West Servative Profile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west Conservative 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 Great-west Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great-west Conservative has no effect on the direction of Citigroup i.e., Citigroup and Great-west Conservative go up and down completely randomly.

Pair Corralation between Citigroup and Great-west Conservative

Taking into account the 90-day investment horizon Citigroup is expected to generate 8.8 times more return on investment than Great-west Conservative. However, Citigroup is 8.8 times more volatile than Great West Servative Profile. It trades about 0.19 of its potential returns per unit of risk. Great West Servative Profile is currently generating about 0.1 per unit of risk. If you would invest  5,744  in Citigroup on September 10, 2024 and sell it today you would earn a total of  1,442  from holding Citigroup or generate 25.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  Great West Servative Profile

Citigroup

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Great-west Conservative

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Servative Profile are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great-west Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Great-west Conservative

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

The idea behind Citigroup and Great West Servative Profile 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.