Correlation Between Citigroup and Invesco CoinShares

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

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

Diversification Opportunities for Citigroup and Invesco CoinShares

0.9

Correlation Coefficient

Citigroup  Invesco CoinShares

Almost no diversification

The 3 months correlation between Citigroup and Invesco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Invesco CoinShares Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco CoinShares Global 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 Invesco CoinShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco CoinShares Global has no effect on the direction of Citigroup i.e., Citigroup and Invesco CoinShares go up and down completely randomly.

Pair Corralation between Citigroup and Invesco CoinShares

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.27 times less return on investment than Invesco CoinShares. But when comparing it to its historical volatility, Citigroup is 1.36 times less risky than Invesco CoinShares. It trades about 0.06 of its potential returns per unit of risk. Invesco CoinShares Global is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,260  in Invesco CoinShares Global on September 29, 2024 and sell it today you would earn a total of  1,544  from holding Invesco CoinShares Global or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.21%
Values	Daily Returns

Citigroup  vs.  Invesco CoinShares Global

Citigroup

Risk-Adjusted Performance

9 of 100

OK

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Invesco CoinShares Global

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco CoinShares Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Invesco CoinShares showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Invesco CoinShares

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

The idea behind Citigroup and Invesco CoinShares Global 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.