Correlation Between Citigroup and Alliance Global

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

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

Diversification Opportunities for Citigroup and Alliance Global

-0.81

Correlation Coefficient

Citigroup  Alliance Global

Pay attention - limited upside

The 3 months correlation between Citigroup and Alliance is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Alliance Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Global 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 Alliance Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Global Group has no effect on the direction of Citigroup i.e., Citigroup and Alliance Global go up and down completely randomly.

Pair Corralation between Citigroup and Alliance Global

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Alliance Global. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.18 times less risky than Alliance Global. The stock trades about -0.09 of its potential returns per unit of risk. The Alliance Global Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  871.00  in Alliance Global Group on September 24, 2024 and sell it today you would lose (1.00) from holding Alliance Global Group or give up 0.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Alliance Global 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.

Alliance Global Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Global Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Citigroup and Alliance Global

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

The idea behind Citigroup and Alliance Global 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.