Correlation Between Citigroup and 1933 Industries

Can any of the company-specific risk be diversified away by investing in both Citigroup and 1933 Industries 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 1933 Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and 1933 Industries, you can compare the effects of market volatilities on Citigroup and 1933 Industries 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 1933 Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 1933 Industries.

Diversification Opportunities for Citigroup and 1933 Industries

-0.76

Correlation Coefficient

Citigroup  1933 Industries

Pay attention - limited upside

The 3 months correlation between Citigroup and 1933 is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and 1933 Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1933 Industries 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 1933 Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1933 Industries has no effect on the direction of Citigroup i.e., Citigroup and 1933 Industries go up and down completely randomly.

Pair Corralation between Citigroup and 1933 Industries

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.65 times less return on investment than 1933 Industries. But when comparing it to its historical volatility, Citigroup is 7.95 times less risky than 1933 Industries. It trades about 0.18 of its potential returns per unit of risk. 1933 Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.74  in 1933 Industries on September 14, 2024 and sell it today you would lose (0.21) from holding 1933 Industries or give up 28.38% of portfolio value over 90 days.

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

Citigroup  vs.  1933 Industries

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.

1933 Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 1933 Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, 1933 Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and 1933 Industries

The main advantage of trading using opposite Citigroup and 1933 Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 1933 Industries 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 1933 Industries will offset losses from the drop in 1933 Industries' long position.

The idea behind Citigroup and 1933 Industries 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.