Correlation Between Citigroup and Appleseed Fund

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

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

Diversification Opportunities for Citigroup and Appleseed Fund

0.05

Correlation Coefficient

Citigroup  Appleseed Fund

Significant diversification

The 3 months correlation between Citigroup and Appleseed is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Appleseed Fund Appleseed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appleseed Fund Appleseed 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 Appleseed Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appleseed Fund Appleseed has no effect on the direction of Citigroup i.e., Citigroup and Appleseed Fund go up and down completely randomly.

Pair Corralation between Citigroup and Appleseed Fund

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.92 times more return on investment than Appleseed Fund. However, Citigroup is 1.08 times less risky than Appleseed Fund. It trades about 0.05 of its potential returns per unit of risk. Appleseed Fund Appleseed is currently generating about -0.27 per unit of risk. If you would invest  7,186  in Citigroup on October 9, 2024 and sell it today you would earn a total of  88.00  from holding Citigroup or generate 1.22% return on investment over 90 days.

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

Citigroup  vs.  Appleseed Fund Appleseed

Citigroup

Risk-Adjusted Performance

10 of 100

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.

Appleseed Fund Appleseed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Appleseed Fund Appleseed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Appleseed Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Appleseed Fund

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

The idea behind Citigroup and Appleseed Fund Appleseed 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.