Correlation Between Citigroup and PCI PAL

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

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

Diversification Opportunities for Citigroup and PCI PAL

0.79

Correlation Coefficient

Citigroup  PCI PAL

Poor diversification

The 3 months correlation between Citigroup and PCI is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PCI PAL PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCI PAL 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 PCI PAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCI PAL PLC has no effect on the direction of Citigroup i.e., Citigroup and PCI PAL go up and down completely randomly.

Pair Corralation between Citigroup and PCI PAL

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.55 times less return on investment than PCI PAL. But when comparing it to its historical volatility, Citigroup is 1.53 times less risky than PCI PAL. It trades about 0.09 of its potential returns per unit of risk. PCI PAL PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,400  in PCI PAL PLC on September 21, 2024 and sell it today you would earn a total of  850.00  from holding PCI PAL PLC or generate 15.74% return on investment over 90 days.

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

Citigroup  vs.  PCI PAL PLC

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.

PCI PAL PLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PCI PAL PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, PCI PAL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and PCI PAL

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

The idea behind Citigroup and PCI PAL 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.