Correlation Between Citigroup and Oak Ridge

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

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

Diversification Opportunities for Citigroup and Oak Ridge

0.92

Correlation Coefficient

Citigroup  Oak Ridge

Almost no diversification

The 3 months correlation between Citigroup and Oak is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Oak Ridge Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak Ridge Financial 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 Oak Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak Ridge Financial has no effect on the direction of Citigroup i.e., Citigroup and Oak Ridge go up and down completely randomly.

Pair Corralation between Citigroup and Oak Ridge

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.36 times less return on investment than Oak Ridge. In addition to that, Citigroup is 1.34 times more volatile than Oak Ridge Financial. It trades about 0.07 of its total potential returns per unit of risk. Oak Ridge Financial is currently generating about 0.12 per unit of volatility. If you would invest  1,675  in Oak Ridge Financial on September 22, 2024 and sell it today you would earn a total of  385.00  from holding Oak Ridge Financial or generate 22.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Oak Ridge Financial

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Oak Ridge Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oak Ridge Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Oak Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Oak Ridge

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

The idea behind Citigroup and Oak Ridge Financial 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 Stocks Directory module to find actively traded stocks across global markets.