Correlation Between Citigroup and Creative Media

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

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

Diversification Opportunities for Citigroup and Creative Media

0.53

Correlation Coefficient

Citigroup  Creative Media

Very weak diversification

The 3 months correlation between Citigroup and Creative is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Creative Media Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Media Community 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 Creative Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Media Community has no effect on the direction of Citigroup i.e., Citigroup and Creative Media go up and down completely randomly.

Pair Corralation between Citigroup and Creative Media

Taking into account the 90-day investment horizon Citigroup is expected to generate 516.8 times less return on investment than Creative Media. But when comparing it to its historical volatility, Citigroup is 65.59 times less risky than Creative Media. It trades about 0.01 of its potential returns per unit of risk. Creative Media Community is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  6,170  in Creative Media Community on December 30, 2024 and sell it today you would earn a total of  1,880  from holding Creative Media Community or generate 30.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.87%
Values	Daily Returns

Citigroup  vs.  Creative Media Community

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Creative Media Community

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Creative Media Community are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Creative Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Creative Media

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

The idea behind Citigroup and Creative Media Community 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.