Correlation Between Citigroup and Xxentria Technology

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

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

Diversification Opportunities for Citigroup and Xxentria Technology

-0.85

Correlation Coefficient

Citigroup  Xxentria Technology

Pay attention - limited upside

The 3 months correlation between Citigroup and Xxentria is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Xxentria Technology Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xxentria Technology 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 Xxentria Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xxentria Technology has no effect on the direction of Citigroup i.e., Citigroup and Xxentria Technology go up and down completely randomly.

Pair Corralation between Citigroup and Xxentria Technology

Taking into account the 90-day investment horizon Citigroup is expected to generate 17.34 times less return on investment than Xxentria Technology. But when comparing it to its historical volatility, Citigroup is 28.07 times less risky than Xxentria Technology. It trades about 0.07 of its potential returns per unit of risk. Xxentria Technology Materials is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,410  in Xxentria Technology Materials on September 21, 2024 and sell it today you would earn a total of  1,060  from holding Xxentria Technology Materials or generate 24.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Citigroup  vs.  Xxentria Technology Materials

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

Xxentria Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xxentria Technology Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Citigroup and Xxentria Technology

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

The idea behind Citigroup and Xxentria Technology Materials 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 Valuation module to check real value of public entities based on technical and fundamental data.