Correlation Between Citigroup and Schweiter Technologies

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

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

Diversification Opportunities for Citigroup and Schweiter Technologies

0.2

Correlation Coefficient

Citigroup  Schweiter Technologies

Modest diversification

The 3 months correlation between Citigroup and Schweiter is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies 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 Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Citigroup i.e., Citigroup and Schweiter Technologies go up and down completely randomly.

Pair Corralation between Citigroup and Schweiter Technologies

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.8 times more return on investment than Schweiter Technologies. However, Citigroup is 1.26 times less risky than Schweiter Technologies. It trades about 0.2 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about 0.05 per unit of risk. If you would invest  5,683  in Citigroup on September 12, 2024 and sell it today you would earn a total of  1,513  from holding Citigroup or generate 26.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  Schweiter Technologies AG

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.

Schweiter Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Schweiter Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Schweiter Technologies

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

The idea behind Citigroup and Schweiter Technologies AG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.