Correlation Between Citigroup and Destinations Core

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

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

Diversification Opportunities for Citigroup and Destinations Core

-0.29

Correlation Coefficient

Citigroup  Destinations Core

Very good diversification

The 3 months correlation between Citigroup and Destinations is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Destinations Core Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations Core Fixed 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 Destinations Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations Core Fixed has no effect on the direction of Citigroup i.e., Citigroup and Destinations Core go up and down completely randomly.

Pair Corralation between Citigroup and Destinations Core

Taking into account the 90-day investment horizon Citigroup is expected to generate 5.97 times more return on investment than Destinations Core. However, Citigroup is 5.97 times more volatile than Destinations Core Fixed. It trades about 0.07 of its potential returns per unit of risk. Destinations Core Fixed is currently generating about -0.5 per unit of risk. If you would invest  7,196  in Citigroup on October 12, 2024 and sell it today you would earn a total of  130.00  from holding Citigroup or generate 1.81% return on investment over 90 days.

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

Citigroup  vs.  Destinations Core Fixed

Citigroup

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 6 (%) 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 February 2025.

Destinations Core Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destinations Core Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Destinations Core 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 Destinations Core

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

The idea behind Citigroup and Destinations Core Fixed 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.