Correlation Between Citigroup and Credit Store

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

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

Diversification Opportunities for Citigroup and Credit Store

0.0

Correlation Coefficient

Citigroup  Credit Store

Pay attention - limited upside

The 3 months correlation between Citigroup and Credit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Credit Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Store 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 Credit Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Store has no effect on the direction of Citigroup i.e., Citigroup and Credit Store go up and down completely randomly.

Pair Corralation between Citigroup and Credit Store

If you would invest  7,086  in Citigroup on December 25, 2024 and sell it today you would earn a total of  112.00  from holding Citigroup or generate 1.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Citigroup  vs.  Credit Store

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Credit Store

Risk-Adjusted Performance

Very Weak

Over the last 90 days Credit Store has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Credit Store is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and Credit Store

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

The idea behind Citigroup and Credit Store 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.