Correlation Between Citigroup and Oppenheimer Discovery

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

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

Diversification Opportunities for Citigroup and Oppenheimer Discovery

0.72

Correlation Coefficient

Citigroup  Oppenheimer Discovery

Poor diversification

The 3 months correlation between Citigroup and Oppenheimer is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Oppenheimer Discovery Fd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Discovery 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 Oppenheimer Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Discovery has no effect on the direction of Citigroup i.e., Citigroup and Oppenheimer Discovery go up and down completely randomly.

Pair Corralation between Citigroup and Oppenheimer Discovery

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.21 times more return on investment than Oppenheimer Discovery. However, Citigroup is 1.21 times more volatile than Oppenheimer Discovery Fd. It trades about 0.07 of its potential returns per unit of risk. Oppenheimer Discovery Fd is currently generating about 0.03 per unit of risk. If you would invest  6,022  in Citigroup on September 22, 2024 and sell it today you would earn a total of  897.00  from holding Citigroup or generate 14.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.22%
Values	Daily Returns

Citigroup  vs.  Oppenheimer Discovery Fd

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Oppenheimer Discovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oppenheimer Discovery Fd has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Oppenheimer Discovery 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 Oppenheimer Discovery

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

The idea behind Citigroup and Oppenheimer Discovery Fd 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.