Correlation Between Citigroup and Aston Bay

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

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

Diversification Opportunities for Citigroup and Aston Bay

0.35

Correlation Coefficient

Citigroup  Aston Bay

Weak diversification

The 3 months correlation between Citigroup and Aston is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aston Bay Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Bay Holdings 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 Aston Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Bay Holdings has no effect on the direction of Citigroup i.e., Citigroup and Aston Bay go up and down completely randomly.

Pair Corralation between Citigroup and Aston Bay

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.32 times more return on investment than Aston Bay. However, Citigroup is 3.16 times less risky than Aston Bay. It trades about 0.03 of its potential returns per unit of risk. Aston Bay Holdings is currently generating about -0.02 per unit of risk. If you would invest  7,051  in Citigroup on December 27, 2024 and sell it today you would earn a total of  134.00  from holding Citigroup or generate 1.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Citigroup  vs.  Aston Bay Holdings

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Aston Bay Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aston Bay Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aston Bay is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citigroup and Aston Bay

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

The idea behind Citigroup and Aston Bay Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.