Correlation Between Citigroup and Philotimo Focused

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

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

Diversification Opportunities for Citigroup and Philotimo Focused

0.87

Correlation Coefficient

Citigroup  Philotimo Focused

Very poor diversification

The 3 months correlation between Citigroup and Philotimo is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Philotimo Focused Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philotimo Focused Growth 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 Philotimo Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philotimo Focused Growth has no effect on the direction of Citigroup i.e., Citigroup and Philotimo Focused go up and down completely randomly.

Pair Corralation between Citigroup and Philotimo Focused

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.53 times less return on investment than Philotimo Focused. In addition to that, Citigroup is 1.22 times more volatile than Philotimo Focused Growth. It trades about 0.12 of its total potential returns per unit of risk. Philotimo Focused Growth is currently generating about 0.23 per unit of volatility. If you would invest  882.00  in Philotimo Focused Growth on September 30, 2024 and sell it today you would earn a total of  212.00  from holding Philotimo Focused Growth or generate 24.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Philotimo Focused Growth

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Philotimo Focused Growth

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Philotimo Focused Growth are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Philotimo Focused showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Philotimo Focused

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

The idea behind Citigroup and Philotimo Focused Growth 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.