Correlation Between Citigroup and BioCryst Pharmaceuticals

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

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

Diversification Opportunities for Citigroup and BioCryst Pharmaceuticals

-0.34

Correlation Coefficient

Citigroup  BioCryst Pharmaceuticals

Very good diversification

The 3 months correlation between Citigroup and BioCryst is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BioCryst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioCryst Pharmaceuticals 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 BioCryst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioCryst Pharmaceuticals has no effect on the direction of Citigroup i.e., Citigroup and BioCryst Pharmaceuticals go up and down completely randomly.

Pair Corralation between Citigroup and BioCryst Pharmaceuticals

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.59 times more return on investment than BioCryst Pharmaceuticals. However, Citigroup is 1.68 times less risky than BioCryst Pharmaceuticals. It trades about 0.16 of its potential returns per unit of risk. BioCryst Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest  6,000  in Citigroup on October 20, 2024 and sell it today you would earn a total of  1,999  from holding Citigroup or generate 33.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.04%
Values	Daily Returns

Citigroup  vs.  BioCryst Pharmaceuticals

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

BioCryst Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BioCryst Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, BioCryst Pharmaceuticals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and BioCryst Pharmaceuticals

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

The idea behind Citigroup and BioCryst Pharmaceuticals 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.