Correlation Between Citigroup and SecureTech Innovations

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

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

Diversification Opportunities for Citigroup and SecureTech Innovations

-0.21

Correlation Coefficient

Citigroup  SecureTech Innovations

Very good diversification

The 3 months correlation between Citigroup and SecureTech is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SecureTech Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SecureTech Innovations 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 SecureTech Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SecureTech Innovations has no effect on the direction of Citigroup i.e., Citigroup and SecureTech Innovations go up and down completely randomly.

Pair Corralation between Citigroup and SecureTech Innovations

Taking into account the 90-day investment horizon Citigroup is expected to generate 21.55 times less return on investment than SecureTech Innovations. But when comparing it to its historical volatility, Citigroup is 29.23 times less risky than SecureTech Innovations. It trades about 0.07 of its potential returns per unit of risk. SecureTech Innovations is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  375.00  in SecureTech Innovations on September 23, 2024 and sell it today you would lose (275.00) from holding SecureTech Innovations or give up 73.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Citigroup  vs.  SecureTech Innovations

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SecureTech Innovations

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SecureTech Innovations are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, SecureTech Innovations demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and SecureTech Innovations

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

The idea behind Citigroup and SecureTech Innovations 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.