Correlation Between Citigroup and UBS Vitainvest

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

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

Diversification Opportunities for Citigroup and UBS Vitainvest

-0.51

Correlation Coefficient

Citigroup  UBS Vitainvest

Excellent diversification

The 3 months correlation between Citigroup and UBS is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and UBS Vitainvest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Vitainvest 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 UBS Vitainvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Vitainvest has no effect on the direction of Citigroup i.e., Citigroup and UBS Vitainvest go up and down completely randomly.

Pair Corralation between Citigroup and UBS Vitainvest

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.49 times more return on investment than UBS Vitainvest. However, Citigroup is 3.49 times more volatile than UBS Vitainvest . It trades about -0.06 of its potential returns per unit of risk. UBS Vitainvest is currently generating about -0.24 per unit of risk. If you would invest  7,215  in Citigroup on October 7, 2024 and sell it today you would lose (115.00) from holding Citigroup or give up 1.59% of portfolio value over 90 days.

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

Citigroup  vs.  UBS Vitainvest

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.

UBS Vitainvest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS Vitainvest has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, UBS Vitainvest is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and UBS Vitainvest

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

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