Correlation Between Citigroup and Ionic Inflation

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

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

Diversification Opportunities for Citigroup and Ionic Inflation

0.76

Correlation Coefficient

Citigroup  Ionic Inflation

Poor diversification

The 3 months correlation between Citigroup and Ionic is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ionic Inflation Protection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ionic Inflation Prot 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 Ionic Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ionic Inflation Prot has no effect on the direction of Citigroup i.e., Citigroup and Ionic Inflation go up and down completely randomly.

Pair Corralation between Citigroup and Ionic Inflation

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.99 times more return on investment than Ionic Inflation. However, Citigroup is 6.99 times more volatile than Ionic Inflation Protection. It trades about 0.06 of its potential returns per unit of risk. Ionic Inflation Protection is currently generating about 0.07 per unit of risk. If you would invest  6,022  in Citigroup on September 21, 2024 and sell it today you would earn a total of  820.00  from holding Citigroup or generate 13.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Citigroup  vs.  Ionic Inflation Protection

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 unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ionic Inflation Prot

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ionic Inflation Protection are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Ionic Inflation is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citigroup and Ionic Inflation

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

The idea behind Citigroup and Ionic Inflation Protection 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.