Correlation Between Citigroup and Zurich Invest

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

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

Diversification Opportunities for Citigroup and Zurich Invest

0.34

Correlation Coefficient

Citigroup  Zurich Invest

Weak diversification

The 3 months correlation between Citigroup and Zurich is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Zurich Invest II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Invest II 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 Zurich Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Invest II has no effect on the direction of Citigroup i.e., Citigroup and Zurich Invest go up and down completely randomly.

Pair Corralation between Citigroup and Zurich Invest

Taking into account the 90-day investment horizon Citigroup is expected to generate 8.45 times more return on investment than Zurich Invest. However, Citigroup is 8.45 times more volatile than Zurich Invest II. It trades about 0.07 of its potential returns per unit of risk. Zurich Invest II is currently generating about 0.05 per unit of risk. If you would invest  4,308  in Citigroup on September 26, 2024 and sell it today you would earn a total of  2,792  from holding Citigroup or generate 64.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Citigroup  vs.  Zurich Invest II

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Zurich Invest II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zurich Invest II has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady forward-looking indicators, Zurich Invest is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Citigroup and Zurich Invest

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

The idea behind Citigroup and Zurich Invest II 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.