Correlation Between Citigroup and Strait Innovation

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

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

Diversification Opportunities for Citigroup and Strait Innovation

0.87

Correlation Coefficient

Citigroup  Strait Innovation

Very poor diversification

The 3 months correlation between Citigroup and Strait is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Strait Innovation Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strait Innovation 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 Strait Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strait Innovation has no effect on the direction of Citigroup i.e., Citigroup and Strait Innovation go up and down completely randomly.

Pair Corralation between Citigroup and Strait Innovation

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.99 times less return on investment than Strait Innovation. But when comparing it to its historical volatility, Citigroup is 3.68 times less risky than Strait Innovation. It trades about 0.23 of its potential returns per unit of risk. Strait Innovation Internet is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  300.00  in Strait Innovation Internet on September 20, 2024 and sell it today you would earn a total of  21.00  from holding Strait Innovation Internet or generate 7.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Strait Innovation Internet

Citigroup

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Strait Innovation

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Strait Innovation Internet are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Strait Innovation sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Strait Innovation

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

The idea behind Citigroup and Strait Innovation Internet 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.