Correlation Between Citigroup and SOFTBANK CORP

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

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

Diversification Opportunities for Citigroup and SOFTBANK CORP

0.07

Correlation Coefficient

Citigroup  SOFTBANK CORP

Significant diversification

The 3 months correlation between Citigroup and SOFTBANK is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SOFTBANK P ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTBANK P ADR 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 SOFTBANK CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTBANK P ADR has no effect on the direction of Citigroup i.e., Citigroup and SOFTBANK CORP go up and down completely randomly.

Pair Corralation between Citigroup and SOFTBANK CORP

Taking into account the 90-day investment horizon Citigroup is expected to generate 9.42 times less return on investment than SOFTBANK CORP. But when comparing it to its historical volatility, Citigroup is 2.3 times less risky than SOFTBANK CORP. It trades about 0.01 of its potential returns per unit of risk. SOFTBANK P ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,110  in SOFTBANK P ADR on December 30, 2024 and sell it today you would earn a total of  130.00  from holding SOFTBANK P ADR or generate 11.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Citigroup  vs.  SOFTBANK P ADR

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.

SOFTBANK P ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SOFTBANK P ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, SOFTBANK CORP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and SOFTBANK CORP

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

The idea behind Citigroup and SOFTBANK P ADR 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.