Correlation Between Citigroup and Audix Corp

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

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

Diversification Opportunities for Citigroup and Audix Corp

-0.49

Correlation Coefficient

Citigroup  Audix Corp

Very good diversification

The 3 months correlation between Citigroup and Audix is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Audix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Audix Corp 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 Audix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Audix Corp has no effect on the direction of Citigroup i.e., Citigroup and Audix Corp go up and down completely randomly.

Pair Corralation between Citigroup and Audix Corp

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.94 times more return on investment than Audix Corp. However, Citigroup is 1.94 times more volatile than Audix Corp. It trades about 0.08 of its potential returns per unit of risk. Audix Corp is currently generating about 0.06 per unit of risk. If you would invest  4,216  in Citigroup on December 5, 2024 and sell it today you would earn a total of  3,019  from holding Citigroup or generate 71.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.57%
Values	Daily Returns

Citigroup  vs.  Audix Corp

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Audix Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Audix Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Audix Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citigroup and Audix Corp

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

The idea behind Citigroup and Audix Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.