Correlation Between Citigroup and CGA Old

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

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

Diversification Opportunities for Citigroup and CGA Old

0.48

Correlation Coefficient

Citigroup  CGA Old

Very weak diversification

The 3 months correlation between Citigroup and CGA is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CGA Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGA Old 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 CGA Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGA Old has no effect on the direction of Citigroup i.e., Citigroup and CGA Old go up and down completely randomly.

Pair Corralation between Citigroup and CGA Old

If you would invest  7,250  in Citigroup on October 11, 2024 and sell it today you would earn a total of  76.00  from holding Citigroup or generate 1.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

Citigroup  vs.  CGA Old

Citigroup

Risk-Adjusted Performance

8 of 100

Good

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.

CGA Old

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days CGA Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unfluctuating technical and fundamental indicators, CGA Old may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citigroup and CGA Old

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

The idea behind Citigroup and CGA Old 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.