Correlation Between Citigroup and SEVEN+I HLDGS

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

By analyzing existing cross correlation between Citigroup and SEVENI HLDGS UNSPADR12, you can compare the effects of market volatilities on Citigroup and SEVEN+I HLDGS 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 SEVEN+I HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and SEVEN+I HLDGS.

Diversification Opportunities for Citigroup and SEVEN+I HLDGS

-0.41

Correlation Coefficient

Citigroup  SEVEN+I HLDGS

Very good diversification

The 3 months correlation between Citigroup and SEVEN+I is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SEVENI HLDGS UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEVENI HLDGS UNSPADR12 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 SEVEN+I HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEVENI HLDGS UNSPADR12 has no effect on the direction of Citigroup i.e., Citigroup and SEVEN+I HLDGS go up and down completely randomly.

Pair Corralation between Citigroup and SEVEN+I HLDGS

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.9 times less return on investment than SEVEN+I HLDGS. But when comparing it to its historical volatility, Citigroup is 5.36 times less risky than SEVEN+I HLDGS. It trades about 0.08 of its potential returns per unit of risk. SEVENI HLDGS UNSPADR12 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,239  in SEVENI HLDGS UNSPADR12 on September 14, 2024 and sell it today you would earn a total of  1.00  from holding SEVENI HLDGS UNSPADR12 or generate 0.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

Citigroup  vs.  SEVENI HLDGS UNSPADR12

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.

SEVENI HLDGS UNSPADR12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEVENI HLDGS UNSPADR12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, SEVEN+I HLDGS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and SEVEN+I HLDGS

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

The idea behind Citigroup and SEVENI HLDGS UNSPADR12 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.