Correlation Between Citigroup and Senstar Technologies

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

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

Diversification Opportunities for Citigroup and Senstar Technologies

0.8

Correlation Coefficient

Citigroup  Senstar Technologies

Very poor diversification

The 3 months correlation between Citigroup and Senstar is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Senstar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senstar Technologies 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 Senstar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senstar Technologies has no effect on the direction of Citigroup i.e., Citigroup and Senstar Technologies go up and down completely randomly.

Pair Corralation between Citigroup and Senstar Technologies

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.6 times less return on investment than Senstar Technologies. But when comparing it to its historical volatility, Citigroup is 2.7 times less risky than Senstar Technologies. It trades about 0.2 of its potential returns per unit of risk. Senstar Technologies is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  160.00  in Senstar Technologies on September 13, 2024 and sell it today you would earn a total of  118.00  from holding Senstar Technologies or generate 73.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Senstar Technologies

Citigroup

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 15 (%) 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.

Senstar Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Senstar Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Senstar Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Senstar Technologies

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

The idea behind Citigroup and Senstar Technologies 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.