Correlation Between Citigroup and CSIF I

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

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

Diversification Opportunities for Citigroup and CSIF I

0.53

Correlation Coefficient

Citigroup  CSIF I

Very weak diversification

The 3 months correlation between Citigroup and CSIF is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CSIF I Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSIF I Bond 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 CSIF I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSIF I Bond has no effect on the direction of Citigroup i.e., Citigroup and CSIF I go up and down completely randomly.

Pair Corralation between Citigroup and CSIF I

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the CSIF I. In addition to that, Citigroup is 4.24 times more volatile than CSIF I Bond. It trades about -0.06 of its total potential returns per unit of risk. CSIF I Bond is currently generating about 0.18 per unit of volatility. If you would invest  66,845  in CSIF I Bond on October 7, 2024 and sell it today you would earn a total of  534.00  from holding CSIF I Bond or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	75.0%
Values	Daily Returns

Citigroup  vs.  CSIF I Bond

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

CSIF I Bond

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days CSIF I Bond has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, CSIF I is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and CSIF I

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

The idea behind Citigroup and CSIF I Bond 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.