Correlation Between Citigroup and Advanced Micro

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

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

Diversification Opportunities for Citigroup and Advanced Micro

0.2

Correlation Coefficient

Citigroup  Advanced Micro

Modest diversification

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

Pair Corralation between Citigroup and Advanced Micro

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.82 times more return on investment than Advanced Micro. However, Citigroup is 1.22 times less risky than Advanced Micro. It trades about 0.04 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about -0.12 per unit of risk. If you would invest  6,929  in Citigroup on December 21, 2024 and sell it today you would earn a total of  269.00  from holding Citigroup or generate 3.88% return on investment over 90 days.

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

Citigroup  vs.  Advanced Micro Devices

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Advanced Micro Devices

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Micro Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Citigroup and Advanced Micro

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

The idea behind Citigroup and Advanced Micro Devices 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..