Correlation Between Citigroup and Bank of Commerce

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

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

Diversification Opportunities for Citigroup and Bank of Commerce

-0.77

Correlation Coefficient

Citigroup  Bank of Commerce

Pay attention - limited upside

The 3 months correlation between Citigroup and Bank is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Bank of Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Commerce 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 Bank of Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Commerce has no effect on the direction of Citigroup i.e., Citigroup and Bank of Commerce go up and down completely randomly.

Pair Corralation between Citigroup and Bank of Commerce

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.48 times more return on investment than Bank of Commerce. However, Citigroup is 2.08 times less risky than Bank of Commerce. It trades about -0.05 of its potential returns per unit of risk. Bank of Commerce is currently generating about -0.22 per unit of risk. If you would invest  7,075  in Citigroup on September 24, 2024 and sell it today you would lose (98.00) from holding Citigroup or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Bank of Commerce

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.

Bank of Commerce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank of Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Citigroup and Bank of Commerce

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

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