Correlation Between Tandy Leather and CITIGROUP

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

By analyzing existing cross correlation between Tandy Leather Factory and CITIGROUP INC 43, you can compare the effects of market volatilities on Tandy Leather and CITIGROUP 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 Tandy Leather with a short position of CITIGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tandy Leather and CITIGROUP.

Diversification Opportunities for Tandy Leather and CITIGROUP

-0.21

Correlation Coefficient

Tandy Leather  CITIGROUP

Very good diversification

The 3 months correlation between Tandy and CITIGROUP is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tandy Leather Factory and CITIGROUP INC 43 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP INC 43 and Tandy Leather 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 Tandy Leather Factory are associated (or correlated) with CITIGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP INC 43 has no effect on the direction of Tandy Leather i.e., Tandy Leather and CITIGROUP go up and down completely randomly.

Pair Corralation between Tandy Leather and CITIGROUP

Considering the 90-day investment horizon Tandy Leather Factory is expected to generate 3.69 times more return on investment than CITIGROUP. However, Tandy Leather is 3.69 times more volatile than CITIGROUP INC 43. It trades about 0.09 of its potential returns per unit of risk. CITIGROUP INC 43 is currently generating about -0.04 per unit of risk. If you would invest  407.00  in Tandy Leather Factory on September 12, 2024 and sell it today you would earn a total of  70.00  from holding Tandy Leather Factory or generate 17.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Tandy Leather Factory  vs.  CITIGROUP INC 43

Tandy Leather Factory

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tandy Leather Factory are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Tandy Leather reported solid returns over the last few months and may actually be approaching a breakup point.

CITIGROUP INC 43

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIGROUP INC 43 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CITIGROUP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tandy Leather and CITIGROUP

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

The idea behind Tandy Leather Factory and CITIGROUP INC 43 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.