Correlation Between Citigroup and Automotive Stampings

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

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

Diversification Opportunities for Citigroup and Automotive Stampings

-0.39

Correlation Coefficient

Citigroup  Automotive Stampings

Very good diversification

The 3 months correlation between Citigroup and Automotive is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Automotive Stampings and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Stampings and 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 Automotive Stampings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Stampings and has no effect on the direction of Citigroup i.e., Citigroup and Automotive Stampings go up and down completely randomly.

Pair Corralation between Citigroup and Automotive Stampings

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.61 times less return on investment than Automotive Stampings. But when comparing it to its historical volatility, Citigroup is 2.06 times less risky than Automotive Stampings. It trades about 0.07 of its potential returns per unit of risk. Automotive Stampings and is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  36,495  in Automotive Stampings and on September 25, 2024 and sell it today you would earn a total of  28,715  from holding Automotive Stampings and or generate 78.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.19%
Values	Daily Returns

Citigroup  vs.  Automotive Stampings and

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

Automotive Stampings and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automotive Stampings and 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Citigroup and Automotive Stampings

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

The idea behind Citigroup and Automotive Stampings and 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.