Correlation Between Citigroup and Rabbit Holdings

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

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

Diversification Opportunities for Citigroup and Rabbit Holdings

-0.62

Correlation Coefficient

Citigroup  Rabbit Holdings

Excellent diversification

The 3 months correlation between Citigroup and Rabbit is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Rabbit Holdings PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rabbit Holdings PCL 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 Rabbit Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rabbit Holdings PCL has no effect on the direction of Citigroup i.e., Citigroup and Rabbit Holdings go up and down completely randomly.

Pair Corralation between Citigroup and Rabbit Holdings

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.65 times more return on investment than Rabbit Holdings. However, Citigroup is 1.54 times less risky than Rabbit Holdings. It trades about 0.15 of its potential returns per unit of risk. Rabbit Holdings PCL is currently generating about -0.16 per unit of risk. If you would invest  5,985  in Citigroup on September 25, 2024 and sell it today you would earn a total of  1,115  from holding Citigroup or generate 18.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Citigroup  vs.  Rabbit Holdings PCL

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) 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.

Rabbit Holdings PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rabbit Holdings PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citigroup and Rabbit Holdings

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

The idea behind Citigroup and Rabbit Holdings PCL 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.