Correlation Between Citigroup and Curasset Capital

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

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

Diversification Opportunities for Citigroup and Curasset Capital

-0.07

Correlation Coefficient

Citigroup  Curasset Capital

Good diversification

The 3 months correlation between Citigroup and Curasset is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Curasset Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curasset Capital Man 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 Curasset Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curasset Capital Man has no effect on the direction of Citigroup i.e., Citigroup and Curasset Capital go up and down completely randomly.

Pair Corralation between Citigroup and Curasset Capital

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.4 times more return on investment than Curasset Capital. However, Citigroup is 6.4 times more volatile than Curasset Capital Management. It trades about 0.14 of its potential returns per unit of risk. Curasset Capital Management is currently generating about -0.15 per unit of risk. If you would invest  6,268  in Citigroup on October 8, 2024 and sell it today you would earn a total of  1,006  from holding Citigroup or generate 16.05% return on investment over 90 days.

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

Citigroup  vs.  Curasset Capital Management

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Curasset Capital Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Curasset Capital Management has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Curasset Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Curasset Capital

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

The idea behind Citigroup and Curasset Capital Management 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.