Correlation Between Citigroup and 1290 Gamco

Can any of the company-specific risk be diversified away by investing in both Citigroup and 1290 Gamco 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 1290 Gamco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and 1290 Gamco Smallmid, you can compare the effects of market volatilities on Citigroup and 1290 Gamco 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 1290 Gamco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 1290 Gamco.

Diversification Opportunities for Citigroup and 1290 Gamco

0.94

Correlation Coefficient

Citigroup  1290 Gamco

Almost no diversification

The 3 months correlation between Citigroup and 1290 is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and 1290 Gamco Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 Gamco Smallmid 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 1290 Gamco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 Gamco Smallmid has no effect on the direction of Citigroup i.e., Citigroup and 1290 Gamco go up and down completely randomly.

Pair Corralation between Citigroup and 1290 Gamco

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.41 times more return on investment than 1290 Gamco. However, Citigroup is 1.41 times more volatile than 1290 Gamco Smallmid. It trades about 0.08 of its potential returns per unit of risk. 1290 Gamco Smallmid is currently generating about 0.05 per unit of risk. If you would invest  4,091  in Citigroup on September 16, 2024 and sell it today you would earn a total of  3,010  from holding Citigroup or generate 73.58% return on investment over 90 days.

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

Citigroup  vs.  1290 Gamco Smallmid

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.

1290 Gamco Smallmid

Risk-Adjusted Performance

9 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 1290 Gamco Smallmid are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, 1290 Gamco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and 1290 Gamco

The main advantage of trading using opposite Citigroup and 1290 Gamco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 1290 Gamco 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 1290 Gamco will offset losses from the drop in 1290 Gamco's long position.

The idea behind Citigroup and 1290 Gamco Smallmid 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.