Correlation Between Citigroup and LEEF BRANDS

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

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

Diversification Opportunities for Citigroup and LEEF BRANDS

0.48

Correlation Coefficient

Citigroup  LEEF BRANDS

Very weak diversification

The 3 months correlation between Citigroup and LEEF is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LEEF BRANDS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEEF BRANDS INC 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 LEEF BRANDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEEF BRANDS INC has no effect on the direction of Citigroup i.e., Citigroup and LEEF BRANDS go up and down completely randomly.

Pair Corralation between Citigroup and LEEF BRANDS

Taking into account the 90-day investment horizon Citigroup is expected to generate 61.01 times less return on investment than LEEF BRANDS. But when comparing it to its historical volatility, Citigroup is 52.28 times less risky than LEEF BRANDS. It trades about 0.17 of its potential returns per unit of risk. LEEF BRANDS INC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.50  in LEEF BRANDS INC on September 17, 2024 and sell it today you would earn a total of  16.50  from holding LEEF BRANDS INC or generate 3300.0% return on investment over 90 days.

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

Citigroup  vs.  LEEF BRANDS INC

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.

LEEF BRANDS INC

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LEEF BRANDS INC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LEEF BRANDS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and LEEF BRANDS

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

The idea behind Citigroup and LEEF BRANDS INC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.