Correlation Between Citigroup and Welspun Corp

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

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

Diversification Opportunities for Citigroup and Welspun Corp

0.67

Correlation Coefficient

Citigroup  Welspun Corp

Poor diversification

The 3 months correlation between Citigroup and Welspun is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Welspun Corp Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welspun Corp Limited 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 Welspun Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welspun Corp Limited has no effect on the direction of Citigroup i.e., Citigroup and Welspun Corp go up and down completely randomly.

Pair Corralation between Citigroup and Welspun Corp

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.31 times less return on investment than Welspun Corp. But when comparing it to its historical volatility, Citigroup is 1.31 times less risky than Welspun Corp. It trades about 0.14 of its potential returns per unit of risk. Welspun Corp Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  65,775  in Welspun Corp Limited on September 20, 2024 and sell it today you would earn a total of  13,015  from holding Welspun Corp Limited or generate 19.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Citigroup  vs.  Welspun Corp Limited

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.

Welspun Corp Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Welspun Corp Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Welspun Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Welspun Corp

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

The idea behind Citigroup and Welspun Corp Limited 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.

Check out your portfolio center.

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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.