Correlation Between Citigroup and Zwipe AS

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

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

Diversification Opportunities for Citigroup and Zwipe AS

-0.76

Correlation Coefficient

Citigroup  Zwipe AS

Pay attention - limited upside

The 3 months correlation between Citigroup and Zwipe is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Zwipe AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zwipe AS 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 Zwipe AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zwipe AS has no effect on the direction of Citigroup i.e., Citigroup and Zwipe AS go up and down completely randomly.

Pair Corralation between Citigroup and Zwipe AS

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.04 times more return on investment than Zwipe AS. However, Citigroup is 22.78 times less risky than Zwipe AS. It trades about 0.25 of its potential returns per unit of risk. Zwipe AS is currently generating about -0.01 per unit of risk. If you would invest  6,815  in Citigroup on September 15, 2024 and sell it today you would earn a total of  286.00  from holding Citigroup or generate 4.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	91.3%
Values	Daily Returns

Citigroup  vs.  Zwipe AS

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.

Zwipe AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zwipe AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Citigroup and Zwipe AS

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

The idea behind Citigroup and Zwipe AS 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.