Correlation Between Citigroup and Orix Corp

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

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

Diversification Opportunities for Citigroup and Orix Corp

-0.11

Correlation Coefficient

Citigroup  Orix Corp

Good diversification

The 3 months correlation between Citigroup and Orix is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Orix Corp Ads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orix Corp Ads 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 Orix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orix Corp Ads has no effect on the direction of Citigroup i.e., Citigroup and Orix Corp go up and down completely randomly.

Pair Corralation between Citigroup and Orix Corp

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.52 times more return on investment than Orix Corp. However, Citigroup is 1.91 times less risky than Orix Corp. It trades about 0.22 of its potential returns per unit of risk. Orix Corp Ads is currently generating about 0.09 per unit of risk. If you would invest  6,980  in Citigroup on September 12, 2024 and sell it today you would earn a total of  270.00  from holding Citigroup or generate 3.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Orix Corp Ads

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.

Orix Corp Ads

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orix Corp Ads has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Orix Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and Orix Corp

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

The idea behind Citigroup and Orix Corp Ads 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.