Correlation Between Citigroup and Toroso Investments

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

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

Diversification Opportunities for Citigroup and Toroso Investments

0.88

Correlation Coefficient

Citigroup  Toroso Investments

Very poor diversification

The 3 months correlation between Citigroup and Toroso is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Toroso Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toroso Investments 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 Toroso Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toroso Investments has no effect on the direction of Citigroup i.e., Citigroup and Toroso Investments go up and down completely randomly.

Pair Corralation between Citigroup and Toroso Investments

If you would invest  6,900  in Citigroup on September 17, 2024 and sell it today you would earn a total of  201.00  from holding Citigroup or generate 2.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	5.0%
Values	Daily Returns

Citigroup  vs.  Toroso Investments

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Toroso Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toroso Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Toroso Investments 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 Toroso Investments

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

The idea behind Citigroup and Toroso Investments 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.