Correlation Between Citigroup and Excelsior Biopharma

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

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

Diversification Opportunities for Citigroup and Excelsior Biopharma

0.44

Correlation Coefficient

Citigroup  Excelsior Biopharma

Very weak diversification

The 3 months correlation between Citigroup and Excelsior is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Excelsior Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelsior Biopharma 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 Excelsior Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelsior Biopharma has no effect on the direction of Citigroup i.e., Citigroup and Excelsior Biopharma go up and down completely randomly.

Pair Corralation between Citigroup and Excelsior Biopharma

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.81 times more return on investment than Excelsior Biopharma. However, Citigroup is 1.24 times less risky than Excelsior Biopharma. It trades about 0.24 of its potential returns per unit of risk. Excelsior Biopharma is currently generating about 0.06 per unit of risk. If you would invest  6,360  in Citigroup on October 26, 2024 and sell it today you would earn a total of  1,788  from holding Citigroup or generate 28.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Excelsior Biopharma

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Excelsior Biopharma

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Excelsior Biopharma are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Excelsior Biopharma may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citigroup and Excelsior Biopharma

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

The idea behind Citigroup and Excelsior Biopharma 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.