Correlation Between Citigroup and Congress Mid

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

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

Diversification Opportunities for Citigroup and Congress Mid

0.9

Correlation Coefficient

Citigroup  Congress Mid

Almost no diversification

The 3 months correlation between Citigroup and Congress is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Congress Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Congress Mid Cap 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 Congress Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Congress Mid Cap has no effect on the direction of Citigroup i.e., Citigroup and Congress Mid go up and down completely randomly.

Pair Corralation between Citigroup and Congress Mid

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.09 times more return on investment than Congress Mid. However, Citigroup is 2.09 times more volatile than Congress Mid Cap. It trades about 0.17 of its potential returns per unit of risk. Congress Mid Cap is currently generating about 0.17 per unit of risk. If you would invest  5,902  in Citigroup on September 7, 2024 and sell it today you would earn a total of  1,321  from holding Citigroup or generate 22.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Congress Mid Cap

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Congress Mid Cap

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Congress Mid Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Congress Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Congress Mid

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

The idea behind Citigroup and Congress Mid Cap 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.