Correlation Between Citigroup and Advanced Connection

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

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

Diversification Opportunities for Citigroup and Advanced Connection

-0.16

Correlation Coefficient

Citigroup  Advanced Connection

Good diversification

The 3 months correlation between Citigroup and Advanced is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Advanced Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Connection 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 Advanced Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Connection has no effect on the direction of Citigroup i.e., Citigroup and Advanced Connection go up and down completely randomly.

Pair Corralation between Citigroup and Advanced Connection

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.45 times more return on investment than Advanced Connection. However, Citigroup is 2.24 times less risky than Advanced Connection. It trades about 0.01 of its potential returns per unit of risk. Advanced Connection is currently generating about -0.12 per unit of risk. If you would invest  6,991  in Citigroup on December 30, 2024 and sell it today you would earn a total of  42.00  from holding Citigroup or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Citigroup  vs.  Advanced Connection

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Advanced Connection

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Connection has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Citigroup and Advanced Connection

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

The idea behind Citigroup and Advanced Connection 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.