Correlation Between Citigroup and Asset Five

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

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

Diversification Opportunities for Citigroup and Asset Five

0.2

Correlation Coefficient

Citigroup  Asset Five

Modest diversification

The 3 months correlation between Citigroup and Asset is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Asset Five Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asset Five Group 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 Asset Five. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asset Five Group has no effect on the direction of Citigroup i.e., Citigroup and Asset Five go up and down completely randomly.

Pair Corralation between Citigroup and Asset Five

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.72 times more return on investment than Asset Five. However, Citigroup is 1.38 times less risky than Asset Five. It trades about -0.05 of its potential returns per unit of risk. Asset Five Group is currently generating about -0.19 per unit of risk. If you would invest  7,075  in Citigroup on September 24, 2024 and sell it today you would lose (98.00) from holding Citigroup or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Citigroup  vs.  Asset Five Group

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Asset Five Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asset Five Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Asset Five is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and Asset Five

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

The idea behind Citigroup and Asset Five Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .