Correlation Between Citigroup and Foxconn Industrial

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

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

Diversification Opportunities for Citigroup and Foxconn Industrial

-0.05

Correlation Coefficient

Citigroup  Foxconn Industrial

Good diversification

The 3 months correlation between Citigroup and Foxconn is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Foxconn Industrial Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxconn 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 Foxconn Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxconn Industrial has no effect on the direction of Citigroup i.e., Citigroup and Foxconn Industrial go up and down completely randomly.

Pair Corralation between Citigroup and Foxconn Industrial

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Foxconn Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.63 times less risky than Foxconn Industrial. The stock trades about -0.09 of its potential returns per unit of risk. The Foxconn Industrial Internet is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,211  in Foxconn Industrial Internet on September 24, 2024 and sell it today you would lose (9.00) from holding Foxconn Industrial Internet or give up 0.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Foxconn Industrial Internet

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Foxconn Industrial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Foxconn Industrial Internet are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Foxconn Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Foxconn Industrial

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

The idea behind Citigroup and Foxconn Industrial 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.