Correlation Between Citigroup and Ryerson Holding

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

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

Diversification Opportunities for Citigroup and Ryerson Holding

0.94

Correlation Coefficient

Citigroup  Ryerson Holding

Almost no diversification

The 3 months correlation between Citigroup and Ryerson is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ryerson Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryerson Holding 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 Ryerson Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryerson Holding has no effect on the direction of Citigroup i.e., Citigroup and Ryerson Holding go up and down completely randomly.

Pair Corralation between Citigroup and Ryerson Holding

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.4 times more return on investment than Ryerson Holding. However, Citigroup is 2.52 times less risky than Ryerson Holding. It trades about 0.2 of its potential returns per unit of risk. Ryerson Holding is currently generating about -0.12 per unit of risk. If you would invest  6,876  in Citigroup on September 16, 2024 and sell it today you would earn a total of  225.00  from holding Citigroup or generate 3.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Ryerson Holding

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Ryerson Holding

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Citigroup and Ryerson Holding

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

The idea behind Citigroup and Ryerson Holding 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.