Correlation Between Citigroup and FDO INV

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

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

Diversification Opportunities for Citigroup and FDO INV

0.92

Correlation Coefficient

Citigroup  FDO INV

Almost no diversification

The 3 months correlation between Citigroup and FDO is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and FDO INV IMOB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDO INV IMOB 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 FDO INV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDO INV IMOB has no effect on the direction of Citigroup i.e., Citigroup and FDO INV go up and down completely randomly.

Pair Corralation between Citigroup and FDO INV

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.06 times more return on investment than FDO INV. However, Citigroup is 1.06 times more volatile than FDO INV IMOB. It trades about 0.18 of its potential returns per unit of risk. FDO INV IMOB is currently generating about 0.16 per unit of risk. If you would invest  5,788  in Citigroup on September 15, 2024 and sell it today you would earn a total of  1,313  from holding Citigroup or generate 22.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  FDO INV IMOB

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.

FDO INV IMOB

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FDO INV IMOB are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, FDO INV sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and FDO INV

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

The idea behind Citigroup and FDO INV IMOB 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.