Correlation Between Citigroup and Doubleline Income

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

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

Diversification Opportunities for Citigroup and Doubleline Income

0.75

Correlation Coefficient

Citigroup  Doubleline Income

Poor diversification

The 3 months correlation between Citigroup and Doubleline is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Doubleline Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubleline Income 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 Doubleline Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubleline Income has no effect on the direction of Citigroup i.e., Citigroup and Doubleline Income go up and down completely randomly.

Pair Corralation between Citigroup and Doubleline Income

Taking into account the 90-day investment horizon Citigroup is expected to generate 11.53 times more return on investment than Doubleline Income. However, Citigroup is 11.53 times more volatile than Doubleline Income. It trades about 0.14 of its potential returns per unit of risk. Doubleline Income is currently generating about 0.09 per unit of risk. If you would invest  6,209  in Citigroup on October 15, 2024 and sell it today you would earn a total of  931.00  from holding Citigroup or generate 14.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Citigroup  vs.  Doubleline Income

Citigroup

Risk-Adjusted Performance

11 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

Doubleline Income

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Doubleline Income are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Doubleline Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Doubleline Income

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

The idea behind Citigroup and Doubleline Income 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.