Correlation Between Citigroup and CL Educate

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

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

Diversification Opportunities for Citigroup and CL Educate

0.01

Correlation Coefficient

Citigroup  CL Educate

Significant diversification

The 3 months correlation between Citigroup and CLEDUCATE is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CL Educate Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CL Educate Limited 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 CL Educate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CL Educate Limited has no effect on the direction of Citigroup i.e., Citigroup and CL Educate go up and down completely randomly.

Pair Corralation between Citigroup and CL Educate

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the CL Educate. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 2.01 times less risky than CL Educate. The stock trades about -0.03 of its potential returns per unit of risk. The CL Educate Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  10,975  in CL Educate Limited on September 23, 2024 and sell it today you would earn a total of  899.00  from holding CL Educate Limited or generate 8.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  CL Educate Limited

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CL Educate Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CL Educate Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CL Educate is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and CL Educate

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

The idea behind Citigroup and CL Educate Limited 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .