Correlation Between Citigroup and Verisk Analytics

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

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

Diversification Opportunities for Citigroup and Verisk Analytics

0.93

Correlation Coefficient

Citigroup  Verisk Analytics

Almost no diversification

The 3 months correlation between Citigroup and Verisk is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Verisk Analytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verisk Analytics 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 Verisk Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verisk Analytics has no effect on the direction of Citigroup i.e., Citigroup and Verisk Analytics go up and down completely randomly.

Pair Corralation between Citigroup and Verisk Analytics

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.49 times more return on investment than Verisk Analytics. However, Citigroup is 1.49 times more volatile than Verisk Analytics. It trades about 0.16 of its potential returns per unit of risk. Verisk Analytics is currently generating about 0.14 per unit of risk. If you would invest  5,937  in Citigroup on September 18, 2024 and sell it today you would earn a total of  1,175  from holding Citigroup or generate 19.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  Verisk Analytics

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) 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.

Verisk Analytics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Verisk Analytics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Verisk Analytics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Verisk Analytics

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

The idea behind Citigroup and Verisk Analytics 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.