Correlation Between Citigroup and Professional Holding

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

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

Diversification Opportunities for Citigroup and Professional Holding

-0.1

Correlation Coefficient

Citigroup  Professional Holding

Good diversification

The 3 months correlation between Citigroup and Professional is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Professional Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Professional Holding Corp 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 Professional Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Professional Holding Corp has no effect on the direction of Citigroup i.e., Citigroup and Professional Holding go up and down completely randomly.

Pair Corralation between Citigroup and Professional Holding

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 Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Citigroup  vs.  Professional Holding Corp

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.

Professional Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Professional Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Professional Holding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Professional Holding

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

The idea behind Citigroup and Professional Holding Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.