Correlation Between Citigroup and Zacks Dividend

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

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

Diversification Opportunities for Citigroup and Zacks Dividend

0.78

Correlation Coefficient

Citigroup  Zacks Dividend

Poor diversification

The 3 months correlation between Citigroup and Zacks is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Zacks Dividend Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zacks Dividend 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 Zacks Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zacks Dividend has no effect on the direction of Citigroup i.e., Citigroup and Zacks Dividend go up and down completely randomly.

Pair Corralation between Citigroup and Zacks Dividend

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.26 times more return on investment than Zacks Dividend. However, Citigroup is 2.26 times more volatile than Zacks Dividend Fund. It trades about 0.08 of its potential returns per unit of risk. Zacks Dividend Fund is currently generating about 0.05 per unit of risk. If you would invest  4,091  in Citigroup on September 16, 2024 and sell it today you would earn a total of  3,010  from holding Citigroup or generate 73.58% return on investment over 90 days.

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

Citigroup  vs.  Zacks Dividend Fund

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.

Zacks Dividend

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zacks Dividend Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Zacks Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Zacks Dividend

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

The idea behind Citigroup and Zacks Dividend 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.