Correlation Between Citigroup and Global X

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

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

Diversification Opportunities for Citigroup and Global X

-0.22

Correlation Coefficient

Citigroup  Global X

Very good diversification

The 3 months correlation between Citigroup and Global is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Global X Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Semiconductor 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Semiconductor has no effect on the direction of Citigroup i.e., Citigroup and Global X go up and down completely randomly.

Pair Corralation between Citigroup and Global X

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.26 times less return on investment than Global X. But when comparing it to its historical volatility, Citigroup is 1.13 times less risky than Global X. It trades about 0.08 of its potential returns per unit of risk. Global X Semiconductor is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,891  in Global X Semiconductor on September 13, 2024 and sell it today you would earn a total of  1,926  from holding Global X Semiconductor or generate 101.85% return on investment over 90 days.

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

Citigroup  vs.  Global X Semiconductor

Citigroup

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 15 (%) 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.

Global X Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Global X

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

The idea behind Citigroup and Global X Semiconductor 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..