Correlation Between Global Ship and Citigroup

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

By analyzing existing cross correlation between Global Ship Lease and Citigroup, you can compare the effects of market volatilities on Global Ship 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 Global Ship with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Citigroup.

Diversification Opportunities for Global Ship and Citigroup

-0.24

Correlation Coefficient

Global Ship  Citigroup

Very good diversification

The 3 months correlation between Global and Citigroup is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Global Ship 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 Global Ship Lease 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 has no effect on the direction of Global Ship i.e., Global Ship and Citigroup go up and down completely randomly.

Pair Corralation between Global Ship and Citigroup

Assuming the 90 days horizon Global Ship Lease is expected to generate 0.78 times more return on investment than Citigroup. However, Global Ship Lease is 1.28 times less risky than Citigroup. It trades about 0.07 of its potential returns per unit of risk. Citigroup is currently generating about 0.0 per unit of risk. If you would invest  2,062  in Global Ship Lease on December 24, 2024 and sell it today you would earn a total of  134.00  from holding Global Ship Lease or generate 6.5% return on investment over 90 days.

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

Global Ship Lease  vs.  Citigroup

Global Ship Lease

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Ship may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Citigroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global Ship and Citigroup

The main advantage of trading using opposite Global Ship and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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 Global Ship Lease and Citigroup 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.