Correlation Between Citigroup and Science Environmental

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

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

Diversification Opportunities for Citigroup and Science Environmental

-0.39

Correlation Coefficient

Citigroup  Science Environmental

Very good diversification

The 3 months correlation between Citigroup and Science is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Science Environmental Protecti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Environmental 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 Science Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Environmental has no effect on the direction of Citigroup i.e., Citigroup and Science Environmental go up and down completely randomly.

Pair Corralation between Citigroup and Science Environmental

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.09 times less return on investment than Science Environmental. But when comparing it to its historical volatility, Citigroup is 1.15 times less risky than Science Environmental. It trades about 0.03 of its potential returns per unit of risk. Science Environmental Protection is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,831  in Science Environmental Protection on December 24, 2024 and sell it today you would earn a total of  536.00  from holding Science Environmental Protection or generate 18.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Citigroup  vs.  Science Environmental Protecti

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Science Environmental

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Science Environmental Protection are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Science Environmental sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Science Environmental

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

The idea behind Citigroup and Science Environmental Protection 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.