Correlation Between Citigroup and Coxon Precise

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

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

Diversification Opportunities for Citigroup and Coxon Precise

-0.65

Correlation Coefficient

Citigroup  Coxon Precise

Excellent diversification

The 3 months correlation between Citigroup and Coxon is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Coxon Precise Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coxon Precise Industrial 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 Coxon Precise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coxon Precise Industrial has no effect on the direction of Citigroup i.e., Citigroup and Coxon Precise go up and down completely randomly.

Pair Corralation between Citigroup and Coxon Precise

Taking into account the 90-day investment horizon Citigroup is expected to generate 7.03 times less return on investment than Coxon Precise. But when comparing it to its historical volatility, Citigroup is 2.56 times less risky than Coxon Precise. It trades about 0.02 of its potential returns per unit of risk. Coxon Precise Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,840  in Coxon Precise Industrial on September 22, 2024 and sell it today you would earn a total of  50.00  from holding Coxon Precise Industrial or generate 2.72% return on investment over 90 days.

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

Citigroup  vs.  Coxon Precise Industrial

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Coxon Precise Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coxon Precise Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Citigroup and Coxon Precise

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

The idea behind Citigroup and Coxon Precise Industrial 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.