Correlation Between Citigroup and HL Multi

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

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

Diversification Opportunities for Citigroup and HL Multi

0.9

Correlation Coefficient

Citigroup  HL Multi

Almost no diversification

The 3 months correlation between Citigroup and 0P0001RI3W is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and HL Multi Index Moderately in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HL Multi Index 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 HL Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HL Multi Index has no effect on the direction of Citigroup i.e., Citigroup and HL Multi go up and down completely randomly.

Pair Corralation between Citigroup and HL Multi

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.54 times more return on investment than HL Multi. However, Citigroup is 3.54 times more volatile than HL Multi Index Moderately. It trades about 0.27 of its potential returns per unit of risk. HL Multi Index Moderately is currently generating about 0.17 per unit of risk. If you would invest  6,122  in Citigroup on October 25, 2024 and sell it today you would earn a total of  2,047  from holding Citigroup or generate 33.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  HL Multi Index Moderately

Citigroup

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 21 (%) 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.

HL Multi Index

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HL Multi Index Moderately are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable forward indicators, HL Multi is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citigroup and HL Multi

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

The idea behind Citigroup and HL Multi Index Moderately 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.