Correlation Between Citigroup and BrightSpring Health

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

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

Diversification Opportunities for Citigroup and BrightSpring Health

0.9

Correlation Coefficient

Citigroup  BrightSpring Health

Almost no diversification

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

Pair Corralation between Citigroup and BrightSpring Health

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.49 times less return on investment than BrightSpring Health. But when comparing it to its historical volatility, Citigroup is 1.19 times less risky than BrightSpring Health. It trades about 0.13 of its potential returns per unit of risk. BrightSpring Health Services, is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  4,817  in BrightSpring Health Services, on September 2, 2024 and sell it today you would earn a total of  2,296  from holding BrightSpring Health Services, or generate 47.66% 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.  BrightSpring Health Services,

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

BrightSpring Health

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BrightSpring Health Services, are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, BrightSpring Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and BrightSpring Health

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

The idea behind Citigroup and BrightSpring Health Services, 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.