Correlation Between Citigroup and Oceanic Beverages

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

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

Diversification Opportunities for Citigroup and Oceanic Beverages

-0.18

Correlation Coefficient

Citigroup  Oceanic Beverages

Good diversification

The 3 months correlation between Citigroup and Oceanic is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Oceanic Beverages Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanic Beverages 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 Oceanic Beverages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanic Beverages has no effect on the direction of Citigroup i.e., Citigroup and Oceanic Beverages go up and down completely randomly.

Pair Corralation between Citigroup and Oceanic Beverages

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.79 times more return on investment than Oceanic Beverages. However, Citigroup is 1.27 times less risky than Oceanic Beverages. It trades about 0.01 of its potential returns per unit of risk. Oceanic Beverages Co is currently generating about -0.06 per unit of risk. If you would invest  6,991  in Citigroup on December 30, 2024 and sell it today you would earn a total of  42.00  from holding Citigroup or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.94%
Values	Daily Returns

Citigroup  vs.  Oceanic Beverages Co

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Oceanic Beverages

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oceanic Beverages Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Citigroup and Oceanic Beverages

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

The idea behind Citigroup and Oceanic Beverages Co 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.