Correlation Between Citigroup and World Poker

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

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

Diversification Opportunities for Citigroup and World Poker

-0.81

Correlation Coefficient

Citigroup  World Poker

Pay attention - limited upside

The 3 months correlation between Citigroup and World is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and World Poker Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Poker Fund 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 World Poker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Poker Fund has no effect on the direction of Citigroup i.e., Citigroup and World Poker go up and down completely randomly.

Pair Corralation between Citigroup and World Poker

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.19 times more return on investment than World Poker. However, Citigroup is 5.38 times less risky than World Poker. It trades about 0.06 of its potential returns per unit of risk. World Poker Fund is currently generating about 0.0 per unit of risk. If you would invest  4,733  in Citigroup on September 26, 2024 and sell it today you would earn a total of  2,367  from holding Citigroup or generate 50.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  World Poker Fund

Citigroup

Risk-Adjusted Performance

10 of 100

OK

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

World Poker Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days World Poker Fund has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Citigroup and World Poker

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

The idea behind Citigroup and World Poker Fund 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.