Correlation Between Citigroup and Touchstone Mid

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

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

Diversification Opportunities for Citigroup and Touchstone Mid

0.84

Correlation Coefficient

Citigroup  Touchstone Mid

Very poor diversification

The 3 months correlation between Citigroup and Touchstone is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Touchstone Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Mid Cap 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 Touchstone Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Mid Cap has no effect on the direction of Citigroup i.e., Citigroup and Touchstone Mid go up and down completely randomly.

Pair Corralation between Citigroup and Touchstone Mid

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.94 times more return on investment than Touchstone Mid. However, Citigroup is 1.94 times more volatile than Touchstone Mid Cap. It trades about 0.14 of its potential returns per unit of risk. Touchstone Mid Cap is currently generating about -0.04 per unit of risk. If you would invest  6,159  in Citigroup on September 20, 2024 and sell it today you would earn a total of  953.00  from holding Citigroup or generate 15.47% return on investment over 90 days.

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

Citigroup  vs.  Touchstone Mid Cap

Citigroup

Risk-Adjusted Performance

10 of 100

Modest

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 unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Touchstone Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Touchstone Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Touchstone Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Touchstone Mid

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

The idea behind Citigroup and Touchstone Mid Cap 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.