Correlation Between Citigroup and Alpha Trust

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

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

Diversification Opportunities for Citigroup and Alpha Trust

-0.15

Correlation Coefficient

Citigroup  Alpha Trust

Good diversification

The 3 months correlation between Citigroup and Alpha is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Alpha Trust Andromeda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Trust Andromeda 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 Alpha Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Trust Andromeda has no effect on the direction of Citigroup i.e., Citigroup and Alpha Trust go up and down completely randomly.

Pair Corralation between Citigroup and Alpha Trust

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Alpha Trust. In addition to that, Citigroup is 1.81 times more volatile than Alpha Trust Andromeda. It trades about -0.06 of its total potential returns per unit of risk. Alpha Trust Andromeda is currently generating about 0.05 per unit of volatility. If you would invest  640.00  in Alpha Trust Andromeda on October 7, 2024 and sell it today you would earn a total of  4.00  from holding Alpha Trust Andromeda or generate 0.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Citigroup  vs.  Alpha Trust Andromeda

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 unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alpha Trust Andromeda

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Trust Andromeda are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alpha Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Alpha Trust

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

The idea behind Citigroup and Alpha Trust Andromeda 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.