Correlation Between Citigroup and Wilmington Large

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

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

Diversification Opportunities for Citigroup and Wilmington Large

0.96

Correlation Coefficient

Citigroup  Wilmington Large

Almost no diversification

The 3 months correlation between Citigroup and Wilmington is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Wilmington Large Cap Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Large Cap 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 Wilmington Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Large Cap has no effect on the direction of Citigroup i.e., Citigroup and Wilmington Large go up and down completely randomly.

Pair Corralation between Citigroup and Wilmington Large

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.8 times more return on investment than Wilmington Large. However, Citigroup is 2.8 times more volatile than Wilmington Large Cap Strategy. It trades about 0.2 of its potential returns per unit of risk. Wilmington Large Cap Strategy is currently generating about 0.2 per unit of risk. If you would invest  5,683  in Citigroup on September 12, 2024 and sell it today you would earn a total of  1,513  from holding Citigroup or generate 26.62% 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.  Wilmington Large Cap Strategy

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.

Wilmington Large Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wilmington Large Cap Strategy are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Wilmington Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Wilmington Large

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

The idea behind Citigroup and Wilmington Large Cap Strategy 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.