Correlation Between Citigroup and CC Neuberger

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

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

Diversification Opportunities for Citigroup and CC Neuberger

0.89

Correlation Coefficient

Citigroup  CC Neuberger

Very poor diversification

The 3 months correlation between Citigroup and PRPC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CC Neuberger Principal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CC Neuberger Principal 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 CC Neuberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CC Neuberger Principal has no effect on the direction of Citigroup i.e., Citigroup and CC Neuberger go up and down completely randomly.

Pair Corralation between Citigroup and CC Neuberger

If you would invest  5,788  in Citigroup on September 14, 2024 and sell it today you would earn a total of  1,408  from holding Citigroup or generate 24.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.59%
Values	Daily Returns

Citigroup  vs.  CC Neuberger Principal

Citigroup

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 14 (%) 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.

CC Neuberger Principal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Citigroup and CC Neuberger

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

The idea behind Citigroup and CC Neuberger Principal 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.