Correlation Between Citigroup and Caseys General

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

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

Diversification Opportunities for Citigroup and Caseys General

0.85

Correlation Coefficient

Citigroup  Caseys General

Very poor diversification

The 3 months correlation between Citigroup and Caseys is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of Citigroup i.e., Citigroup and Caseys General go up and down completely randomly.

Pair Corralation between Citigroup and Caseys General

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.19 times less return on investment than Caseys General. In addition to that, Citigroup is 1.15 times more volatile than Caseys General Stores. It trades about 0.11 of its total potential returns per unit of risk. Caseys General Stores is currently generating about 0.15 per unit of volatility. If you would invest  36,185  in Caseys General Stores on August 30, 2024 and sell it today you would earn a total of  5,913  from holding Caseys General Stores or generate 16.34% return on investment over 90 days.

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

Citigroup  vs.  Caseys General Stores

Citigroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) 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.

Caseys General Stores

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caseys General showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Caseys General

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

The idea behind Citigroup and Caseys General Stores 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.