Correlation Between Citigroup and Bluebik Group

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

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

Diversification Opportunities for Citigroup and Bluebik Group

0.2

Correlation Coefficient

Citigroup  Bluebik Group

Modest diversification

The 3 months correlation between Citigroup and Bluebik is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Bluebik Group PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluebik Group PCL 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 Bluebik Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluebik Group PCL has no effect on the direction of Citigroup i.e., Citigroup and Bluebik Group go up and down completely randomly.

Pair Corralation between Citigroup and Bluebik Group

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.76 times more return on investment than Bluebik Group. However, Citigroup is 1.31 times less risky than Bluebik Group. It trades about 0.0 of its potential returns per unit of risk. Bluebik Group PCL is currently generating about -0.38 per unit of risk. If you would invest  7,149  in Citigroup on October 15, 2024 and sell it today you would lose (9.00) from holding Citigroup or give up 0.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Citigroup  vs.  Bluebik Group PCL

Citigroup

Risk-Adjusted Performance

11 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

Bluebik Group PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluebik Group PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bluebik Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and Bluebik Group

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

The idea behind Citigroup and Bluebik Group PCL 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.