Correlation Between Citigroup and OneSavings Bank

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

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

Diversification Opportunities for Citigroup and OneSavings Bank

0.41

Correlation Coefficient

Citigroup  OneSavings Bank

Very weak diversification

The 3 months correlation between Citigroup and OneSavings is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and OneSavings Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSavings Bank PLC 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 OneSavings Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSavings Bank PLC has no effect on the direction of Citigroup i.e., Citigroup and OneSavings Bank go up and down completely randomly.

Pair Corralation between Citigroup and OneSavings Bank

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.22 times more return on investment than OneSavings Bank. However, Citigroup is 1.22 times more volatile than OneSavings Bank PLC. It trades about 0.2 of its potential returns per unit of risk. OneSavings Bank PLC is currently generating about 0.1 per unit of risk. If you would invest  5,716  in Citigroup on September 13, 2024 and sell it today you would earn a total of  1,480  from holding Citigroup or generate 25.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  OneSavings Bank PLC

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.

OneSavings Bank PLC

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Citigroup and OneSavings Bank

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

The idea behind Citigroup and OneSavings Bank PLC 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.