Correlation Between Citigroup and PetMed Express

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

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

Diversification Opportunities for Citigroup and PetMed Express

0.87

Correlation Coefficient

Citigroup  PetMed Express

Very poor diversification

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

Pair Corralation between Citigroup and PetMed Express

Taking into account the 90-day investment horizon Citigroup is expected to generate 5.48 times less return on investment than PetMed Express. But when comparing it to its historical volatility, Citigroup is 6.57 times less risky than PetMed Express. It trades about 0.25 of its potential returns per unit of risk. PetMed Express is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  500.00  in PetMed Express on September 13, 2024 and sell it today you would earn a total of  126.00  from holding PetMed Express or generate 25.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	91.3%
Values	Daily Returns

Citigroup  vs.  PetMed Express

Citigroup

Risk-Adjusted Performance

15 of 100

Solid

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.

PetMed Express

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PetMed Express are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PetMed Express reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and PetMed Express

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

The idea behind Citigroup and PetMed Express 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.