Correlation Between Citigroup and Universal Scientific

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

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

Diversification Opportunities for Citigroup and Universal Scientific

-0.03

Correlation Coefficient

Citigroup  Universal Scientific

Good diversification

The 3 months correlation between Citigroup and Universal is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Universal Scientific Industria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Scientific 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 Universal Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Scientific has no effect on the direction of Citigroup i.e., Citigroup and Universal Scientific go up and down completely randomly.

Pair Corralation between Citigroup and Universal Scientific

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.68 times more return on investment than Universal Scientific. However, Citigroup is 1.46 times less risky than Universal Scientific. It trades about 0.07 of its potential returns per unit of risk. Universal Scientific Industrial is currently generating about 0.01 per unit of risk. If you would invest  4,308  in Citigroup on September 26, 2024 and sell it today you would earn a total of  2,792  from holding Citigroup or generate 64.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.17%
Values	Daily Returns

Citigroup  vs.  Universal Scientific Industria

Citigroup

Risk-Adjusted Performance

10 of 100

OK

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Universal Scientific

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Scientific Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Universal Scientific sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Universal Scientific

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

The idea behind Citigroup and Universal Scientific 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.