Correlation Between Citigroup and STANDARD SUPPLY

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

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

Diversification Opportunities for Citigroup and STANDARD SUPPLY

-0.7

Correlation Coefficient

Citigroup  STANDARD SUPPLY

Excellent diversification

The 3 months correlation between Citigroup and STANDARD is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and STANDARD SUPPLY NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STANDARD SUPPLY NK 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 STANDARD SUPPLY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STANDARD SUPPLY NK has no effect on the direction of Citigroup i.e., Citigroup and STANDARD SUPPLY go up and down completely randomly.

Pair Corralation between Citigroup and STANDARD SUPPLY

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.34 times more return on investment than STANDARD SUPPLY. However, Citigroup is 2.96 times less risky than STANDARD SUPPLY. It trades about 0.23 of its potential returns per unit of risk. STANDARD SUPPLY NK is currently generating about -0.48 per unit of risk. If you would invest  6,860  in Citigroup on September 20, 2024 and sell it today you would earn a total of  252.00  from holding Citigroup or generate 3.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  STANDARD SUPPLY NK

Citigroup

Risk-Adjusted Performance

10 of 100

Modest

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

STANDARD SUPPLY NK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STANDARD SUPPLY NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Citigroup and STANDARD SUPPLY

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

The idea behind Citigroup and STANDARD SUPPLY NK 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.