Correlation Between Citigroup and United Internet

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

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

Diversification Opportunities for Citigroup and United Internet

0.35

Correlation Coefficient

Citigroup  United Internet

Weak diversification

The 3 months correlation between Citigroup and United is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Citigroup i.e., Citigroup and United Internet go up and down completely randomly.

Pair Corralation between Citigroup and United Internet

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.86 times more return on investment than United Internet. However, Citigroup is 1.16 times less risky than United Internet. It trades about 0.13 of its potential returns per unit of risk. United Internet AG is currently generating about 0.1 per unit of risk. If you would invest  7,038  in Citigroup on November 29, 2024 and sell it today you would earn a total of  869.00  from holding Citigroup or generate 12.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Citigroup  vs.  United Internet AG

Citigroup

Risk-Adjusted Performance

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.

United Internet AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Internet AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, United Internet may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Citigroup and United Internet

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

The idea behind Citigroup and United Internet AG 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.