Correlation Between Citigroup and All Things

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

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

Diversification Opportunities for Citigroup and All Things

0.62

Correlation Coefficient

Citigroup  All Things

Poor diversification

The 3 months correlation between Citigroup and All is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and All Things Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Things Mobile 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 All Things. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Things Mobile has no effect on the direction of Citigroup i.e., Citigroup and All Things go up and down completely randomly.

Pair Corralation between Citigroup and All Things

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.23 times more return on investment than All Things. However, Citigroup is 4.31 times less risky than All Things. It trades about 0.04 of its potential returns per unit of risk. All Things Mobile is currently generating about -0.06 per unit of risk. If you would invest  7,250  in Citigroup on October 11, 2024 and sell it today you would earn a total of  76.00  from holding Citigroup or generate 1.05% return on investment over 90 days.

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

Citigroup  vs.  All Things Mobile

Citigroup

Risk-Adjusted Performance

9 of 100

Good

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.

All Things Mobile

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in All Things Mobile are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating primary indicators, All Things demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and All Things

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

The idea behind Citigroup and All Things Mobile 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.