Correlation Between Citigroup and Amsterdam Commodities

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

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

Diversification Opportunities for Citigroup and Amsterdam Commodities

-0.36

Correlation Coefficient

Citigroup  Amsterdam Commodities

Very good diversification

The 3 months correlation between Citigroup and Amsterdam is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Amsterdam Commodities NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amsterdam Commodities 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 Amsterdam Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amsterdam Commodities has no effect on the direction of Citigroup i.e., Citigroup and Amsterdam Commodities go up and down completely randomly.

Pair Corralation between Citigroup and Amsterdam Commodities

Taking into account the 90-day investment horizon Citigroup is expected to generate 10.97 times less return on investment than Amsterdam Commodities. In addition to that, Citigroup is 1.31 times more volatile than Amsterdam Commodities NV. It trades about 0.01 of its total potential returns per unit of risk. Amsterdam Commodities NV is currently generating about 0.21 per unit of volatility. If you would invest  1,734  in Amsterdam Commodities NV on December 28, 2024 and sell it today you would earn a total of  381.00  from holding Amsterdam Commodities NV or generate 21.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Citigroup  vs.  Amsterdam Commodities NV

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.

Amsterdam Commodities

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amsterdam Commodities NV are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Amsterdam Commodities sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Amsterdam Commodities

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

The idea behind Citigroup and Amsterdam Commodities NV 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.