Correlation Between Citigroup and 191216CU2

Can any of the company-specific risk be diversified away by investing in both Citigroup and 191216CU2 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 191216CU2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and COCA COLA CO, you can compare the effects of market volatilities on Citigroup and 191216CU2 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 191216CU2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 191216CU2.

Diversification Opportunities for Citigroup and 191216CU2

-0.57

Correlation Coefficient

Citigroup  191216CU2

Excellent diversification

The 3 months correlation between Citigroup and 191216CU2 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216CU2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Citigroup i.e., Citigroup and 191216CU2 go up and down completely randomly.

Pair Corralation between Citigroup and 191216CU2

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.98 times more return on investment than 191216CU2. However, Citigroup is 3.98 times more volatile than COCA COLA CO. It trades about 0.07 of its potential returns per unit of risk. COCA COLA CO is currently generating about -0.04 per unit of risk. If you would invest  6,013  in Citigroup on September 24, 2024 and sell it today you would earn a total of  964.00  from holding Citigroup or generate 16.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Citigroup  vs.  COCA COLA CO

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216CU2 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and 191216CU2

The main advantage of trading using opposite Citigroup and 191216CU2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 191216CU2 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 191216CU2 will offset losses from the drop in 191216CU2's long position.

The idea behind Citigroup and COCA COLA CO 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.