Correlation Between Citigroup and Baillie Gifford

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

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

Diversification Opportunities for Citigroup and Baillie Gifford

0.62

Correlation Coefficient

Citigroup  Baillie Gifford

Poor diversification

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

Pair Corralation between Citigroup and Baillie Gifford

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.52 times more return on investment than Baillie Gifford. However, Citigroup is 1.52 times more volatile than Baillie Gifford China. It trades about 0.12 of its potential returns per unit of risk. Baillie Gifford China is currently generating about 0.03 per unit of risk. If you would invest  6,543  in Citigroup on September 13, 2024 and sell it today you would earn a total of  630.00  from holding Citigroup or generate 9.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	88.37%
Values	Daily Returns

Citigroup  vs.  Baillie Gifford China

Citigroup

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 15 (%) 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.

Baillie Gifford China

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baillie Gifford China are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Baillie Gifford showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Baillie Gifford

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

The idea behind Citigroup and Baillie Gifford China 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.