Correlation Between Citigroup and CS Real

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

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

Diversification Opportunities for Citigroup and CS Real

0.05

Correlation Coefficient

Citigroup  CS Real

Significant diversification

The 3 months correlation between Citigroup and CSLP is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CS Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS Real Estate 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 CS Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS Real Estate has no effect on the direction of Citigroup i.e., Citigroup and CS Real go up and down completely randomly.

Pair Corralation between Citigroup and CS Real

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.74 times less return on investment than CS Real. In addition to that, Citigroup is 1.31 times more volatile than CS Real Estate. It trades about 0.07 of its total potential returns per unit of risk. CS Real Estate is currently generating about 0.27 per unit of volatility. If you would invest  14,800  in CS Real Estate on September 27, 2024 and sell it today you would earn a total of  750.00  from holding CS Real Estate or generate 5.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  CS Real Estate

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

CS Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CS Real Estate are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, CS Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citigroup and CS Real

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

The idea behind Citigroup and CS Real Estate 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.