Correlation Between Citigroup and Swift Foods

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

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

Diversification Opportunities for Citigroup and Swift Foods

-0.51

Correlation Coefficient

Citigroup  Swift Foods

Excellent diversification

The 3 months correlation between Citigroup and Swift is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Swift Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swift Foods 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 Swift Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swift Foods has no effect on the direction of Citigroup i.e., Citigroup and Swift Foods go up and down completely randomly.

Pair Corralation between Citigroup and Swift Foods

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.41 times more return on investment than Swift Foods. However, Citigroup is 2.42 times less risky than Swift Foods. It trades about 0.07 of its potential returns per unit of risk. Swift Foods is currently generating about -0.01 per unit of risk. If you would invest  6,043  in Citigroup on September 25, 2024 and sell it today you would earn a total of  876.00  from holding Citigroup or generate 14.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.4%
Values	Daily Returns

Citigroup  vs.  Swift Foods

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Swift Foods

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swift Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Swift Foods is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Swift Foods

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

The idea behind Citigroup and Swift Foods 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.