Correlation Between Citigroup and Andretti Acquisition

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

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

Diversification Opportunities for Citigroup and Andretti Acquisition

-0.56

Correlation Coefficient

Citigroup  Andretti Acquisition

Excellent diversification

The 3 months correlation between Citigroup and Andretti is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Andretti Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andretti Acquisition 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 Andretti Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andretti Acquisition Corp has no effect on the direction of Citigroup i.e., Citigroup and Andretti Acquisition go up and down completely randomly.

Pair Corralation between Citigroup and Andretti Acquisition

Taking into account the 90-day investment horizon Citigroup is expected to generate 39.62 times less return on investment than Andretti Acquisition. But when comparing it to its historical volatility, Citigroup is 35.98 times less risky than Andretti Acquisition. It trades about 0.19 of its potential returns per unit of risk. Andretti Acquisition Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Andretti Acquisition Corp on September 19, 2024 and sell it today you would earn a total of  7.00  from holding Andretti Acquisition Corp or generate 77.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Andretti Acquisition Corp

Citigroup

Risk-Adjusted Performance

9 of 100

Good

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 unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Andretti Acquisition Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Andretti Acquisition Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Andretti Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Andretti Acquisition

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

The idea behind Citigroup and Andretti Acquisition 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..