Correlation Between Citigroup and UBS IF

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

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

Diversification Opportunities for Citigroup and UBS IF

0.84

Correlation Coefficient

Citigroup  UBS IF

Very poor diversification

The 3 months correlation between Citigroup and UBS is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and UBS IF Eqs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS IF Eqs 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 IF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS IF Eqs has no effect on the direction of Citigroup i.e., Citigroup and UBS IF go up and down completely randomly.

Pair Corralation between Citigroup and UBS IF

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the UBS IF. In addition to that, Citigroup is 1.21 times more volatile than UBS IF Eqs. It trades about -0.04 of its total potential returns per unit of risk. UBS IF Eqs is currently generating about 0.06 per unit of volatility. If you would invest  23,548  in UBS IF Eqs on October 8, 2024 and sell it today you would earn a total of  195.00  from holding UBS IF Eqs or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	73.68%
Values	Daily Returns

Citigroup  vs.  UBS IF Eqs

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 IF Eqs

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days UBS IF Eqs has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat unfluctuating basic indicators, UBS IF may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citigroup and UBS IF

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

The idea behind Citigroup and UBS IF Eqs 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.