Correlation Between Citigroup and Five Below

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

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

Diversification Opportunities for Citigroup and Five Below

0.59

Correlation Coefficient

Citigroup  Five Below

Very weak diversification

The 3 months correlation between Citigroup and Five is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below 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 Five Below. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Below has no effect on the direction of Citigroup i.e., Citigroup and Five Below go up and down completely randomly.

Pair Corralation between Citigroup and Five Below

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.51 times more return on investment than Five Below. However, Citigroup is 1.97 times less risky than Five Below. It trades about 0.07 of its potential returns per unit of risk. Five Below is currently generating about 0.02 per unit of risk. If you would invest  6,046  in Citigroup on September 23, 2024 and sell it today you would earn a total of  873.00  from holding Citigroup or generate 14.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.69%
Values	Daily Returns

Citigroup  vs.  Five Below

Citigroup

Risk-Adjusted Performance

7 of 100

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 uncertain fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Five Below

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Five Below are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Five Below reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Five Below

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

The idea behind Citigroup and Five Below 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.