Correlation Between Citigroup and POSBO UNSPADRS/20YC1

Can any of the company-specific risk be diversified away by investing in both Citigroup and POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and POSBO UNSPADRS20YC1, you can compare the effects of market volatilities on Citigroup and POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and POSBO UNSPADRS/20YC1.

Diversification Opportunities for Citigroup and POSBO UNSPADRS/20YC1

0.78

Correlation Coefficient

Citigroup  POSBO UNSPADRS/20YC1

Poor diversification

The 3 months correlation between Citigroup and POSBO is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and POSBO UNSPADRS20YC1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSBO UNSPADRS/20YC1 has no effect on the direction of Citigroup i.e., Citigroup and POSBO UNSPADRS/20YC1 go up and down completely randomly.

Pair Corralation between Citigroup and POSBO UNSPADRS/20YC1

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.81 times less return on investment than POSBO UNSPADRS/20YC1. In addition to that, Citigroup is 1.07 times more volatile than POSBO UNSPADRS20YC1. It trades about 0.09 of its total potential returns per unit of risk. POSBO UNSPADRS20YC1 is currently generating about 0.17 per unit of volatility. If you would invest  1,008  in POSBO UNSPADRS20YC1 on December 3, 2024 and sell it today you would earn a total of  172.00  from holding POSBO UNSPADRS20YC1 or generate 17.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  POSBO UNSPADRS20YC1

Citigroup

Risk-Adjusted Performance

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 April 2025.

POSBO UNSPADRS/20YC1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in POSBO UNSPADRS20YC1 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, POSBO UNSPADRS/20YC1 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and POSBO UNSPADRS/20YC1

The main advantage of trading using opposite Citigroup and POSBO UNSPADRS/20YC1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS/20YC1 will offset losses from the drop in POSBO UNSPADRS/20YC1's long position.

The idea behind Citigroup and POSBO UNSPADRS20YC1 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 Global Correlations module to find global opportunities by holding instruments from different markets.