Correlation Between Citigroup and AXA SA

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

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

Diversification Opportunities for Citigroup and AXA SA

-0.77

Correlation Coefficient

Citigroup  AXA SA

Pay attention - limited upside

The 3 months correlation between Citigroup and AXA is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA 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 AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of Citigroup i.e., Citigroup and AXA SA go up and down completely randomly.

Pair Corralation between Citigroup and AXA SA

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the AXA SA. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.08 times less risky than AXA SA. The stock trades about -0.03 of its potential returns per unit of risk. The AXA SA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,413  in AXA SA on September 23, 2024 and sell it today you would lose (27.00) from holding AXA SA or give up 0.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  AXA SA

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AXA SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXA SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AXA SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and AXA SA

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

The idea behind Citigroup and AXA SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.