Correlation Between Citigroup and Clover Power

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

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

Diversification Opportunities for Citigroup and Clover Power

-0.34

Correlation Coefficient

Citigroup  Clover Power

Very good diversification

The 3 months correlation between Citigroup and Clover is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Clover Power PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clover Power PCL 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 Clover Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clover Power PCL has no effect on the direction of Citigroup i.e., Citigroup and Clover Power go up and down completely randomly.

Pair Corralation between Citigroup and Clover Power

Taking into account the 90-day investment horizon Citigroup is expected to generate 12.51 times less return on investment than Clover Power. But when comparing it to its historical volatility, Citigroup is 27.84 times less risky than Clover Power. It trades about 0.07 of its potential returns per unit of risk. Clover Power PCL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  186.00  in Clover Power PCL on October 23, 2024 and sell it today you would lose (173.00) from holding Clover Power PCL or give up 93.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.17%
Values	Daily Returns

Citigroup  vs.  Clover Power PCL

Citigroup

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) 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.

Clover Power PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clover Power PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Citigroup and Clover Power

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

The idea behind Citigroup and Clover Power PCL 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.