Correlation Between Citigroup and Amaya Leisure

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

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

Diversification Opportunities for Citigroup and Amaya Leisure

0.88

Correlation Coefficient

Citigroup  Amaya Leisure

Very poor diversification

The 3 months correlation between Citigroup and Amaya is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Amaya Leisure PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amaya Leisure PLC 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 Amaya Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amaya Leisure PLC has no effect on the direction of Citigroup i.e., Citigroup and Amaya Leisure go up and down completely randomly.

Pair Corralation between Citigroup and Amaya Leisure

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.53 times less return on investment than Amaya Leisure. But when comparing it to its historical volatility, Citigroup is 1.42 times less risky than Amaya Leisure. It trades about 0.09 of its potential returns per unit of risk. Amaya Leisure PLC is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,030  in Amaya Leisure PLC on September 15, 2024 and sell it today you would earn a total of  1,170  from holding Amaya Leisure PLC or generate 57.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.44%
Values	Daily Returns

Citigroup  vs.  Amaya Leisure PLC

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.

Amaya Leisure PLC

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amaya Leisure PLC are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amaya Leisure sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Amaya Leisure

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

The idea behind Citigroup and Amaya Leisure PLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.