Correlation Between Citigroup and Ally Leasehold

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

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

Diversification Opportunities for Citigroup and Ally Leasehold

-0.66

Correlation Coefficient

Citigroup  Ally Leasehold

Excellent diversification

The 3 months correlation between Citigroup and Ally is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ally Leasehold Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Leasehold Real 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 Ally Leasehold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Leasehold Real has no effect on the direction of Citigroup i.e., Citigroup and Ally Leasehold go up and down completely randomly.

Pair Corralation between Citigroup and Ally Leasehold

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.34 times more return on investment than Ally Leasehold. However, Citigroup is 1.34 times more volatile than Ally Leasehold Real. It trades about 0.13 of its potential returns per unit of risk. Ally Leasehold Real is currently generating about -0.04 per unit of risk. If you would invest  7,090  in Citigroup on December 1, 2024 and sell it today you would earn a total of  905.00  from holding Citigroup or generate 12.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Ally Leasehold Real

Citigroup

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ally Leasehold Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ally Leasehold Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Ally Leasehold is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and Ally Leasehold

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

The idea behind Citigroup and Ally Leasehold Real 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..