Correlation Between Citigroup and Affinity

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

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

Diversification Opportunities for Citigroup and Affinity

0.36

Correlation Coefficient

Citigroup  Affinity

Weak diversification

The 3 months correlation between Citigroup and Affinity is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Affinity Ci Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity Ci Growth 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 Affinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity Ci Growth has no effect on the direction of Citigroup i.e., Citigroup and Affinity go up and down completely randomly.

Pair Corralation between Citigroup and Affinity

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.54 times more return on investment than Affinity. However, Citigroup is 3.54 times more volatile than Affinity Ci Growth. It trades about 0.24 of its potential returns per unit of risk. Affinity Ci Growth is currently generating about 0.05 per unit of risk. If you would invest  6,360  in Citigroup on October 27, 2024 and sell it today you would earn a total of  1,788  from holding Citigroup or generate 28.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Citigroup  vs.  Affinity Ci Growth

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

Affinity Ci Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Affinity Ci Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Affinity 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 Affinity

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

The idea behind Citigroup and Affinity Ci Growth 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.