Correlation Between Citigroup and TPV Technology

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

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

Diversification Opportunities for Citigroup and TPV Technology

0.74

Correlation Coefficient

Citigroup  TPV Technology

Poor diversification

The 3 months correlation between Citigroup and TPV is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and TPV Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPV Technology 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 TPV Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPV Technology has no effect on the direction of Citigroup i.e., Citigroup and TPV Technology go up and down completely randomly.

Pair Corralation between Citigroup and TPV Technology

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.57 times more return on investment than TPV Technology. However, Citigroup is 1.76 times less risky than TPV Technology. It trades about 0.1 of its potential returns per unit of risk. TPV Technology Co is currently generating about 0.03 per unit of risk. If you would invest  5,001  in Citigroup on October 9, 2024 and sell it today you would earn a total of  2,367  from holding Citigroup or generate 47.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.95%
Values	Daily Returns

Citigroup  vs.  TPV Technology Co

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

TPV Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TPV Technology Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TPV Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and TPV Technology

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

The idea behind Citigroup and TPV Technology Co 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.