Correlation Between Citigroup and CELLULAR GOODS

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

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

Diversification Opportunities for Citigroup and CELLULAR GOODS

0.68

Correlation Coefficient

Citigroup  CELLULAR GOODS

Poor diversification

The 3 months correlation between Citigroup and CELLULAR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CELLULAR GOODS LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CELLULAR GOODS LS 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 CELLULAR GOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CELLULAR GOODS LS has no effect on the direction of Citigroup i.e., Citigroup and CELLULAR GOODS go up and down completely randomly.

Pair Corralation between Citigroup and CELLULAR GOODS

Taking into account the 90-day investment horizon Citigroup is expected to generate 85.03 times less return on investment than CELLULAR GOODS. But when comparing it to its historical volatility, Citigroup is 22.79 times less risky than CELLULAR GOODS. It trades about 0.04 of its potential returns per unit of risk. CELLULAR GOODS LS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.05  in CELLULAR GOODS LS on December 22, 2024 and sell it today you would earn a total of  0.15  from holding CELLULAR GOODS LS or generate 300.0% return on investment over 90 days.

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

Citigroup  vs.  CELLULAR GOODS LS

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) 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.

CELLULAR GOODS LS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CELLULAR GOODS LS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CELLULAR GOODS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and CELLULAR GOODS

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

The idea behind Citigroup and CELLULAR GOODS LS 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.