Correlation Between Citigroup and ExcelFin Acquisition

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

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

Diversification Opportunities for Citigroup and ExcelFin Acquisition

-0.47

Correlation Coefficient

Citigroup  ExcelFin Acquisition

Very good diversification

The 3 months correlation between Citigroup and ExcelFin is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ExcelFin Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExcelFin Acquisition Corp 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 ExcelFin Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExcelFin Acquisition Corp has no effect on the direction of Citigroup i.e., Citigroup and ExcelFin Acquisition go up and down completely randomly.

Pair Corralation between Citigroup and ExcelFin Acquisition

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.35 times more return on investment than ExcelFin Acquisition. However, Citigroup is 2.86 times less risky than ExcelFin Acquisition. It trades about 0.18 of its potential returns per unit of risk. ExcelFin Acquisition Corp is currently generating about -0.14 per unit of risk. If you would invest  5,788  in Citigroup on September 16, 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 Against
Strength	Very Weak
Accuracy	30.77%
Values	Daily Returns

Citigroup  vs.  ExcelFin Acquisition Corp

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.

ExcelFin Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ExcelFin Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Citigroup and ExcelFin Acquisition

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

The idea behind Citigroup and ExcelFin Acquisition Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.