Correlation Between Citigroup and Del Monte

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

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

Diversification Opportunities for Citigroup and Del Monte

-0.21

Correlation Coefficient

Citigroup  Del Monte

Very good diversification

The 3 months correlation between Citigroup and Del is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Del Monte Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Del Monte Pacific 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 Del Monte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Del Monte Pacific has no effect on the direction of Citigroup i.e., Citigroup and Del Monte go up and down completely randomly.

Pair Corralation between Citigroup and Del Monte

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.41 times more return on investment than Del Monte. However, Citigroup is 2.42 times less risky than Del Monte. It trades about -0.09 of its potential returns per unit of risk. Del Monte Pacific is currently generating about -0.07 per unit of risk. If you would invest  7,075  in Citigroup on September 24, 2024 and sell it today you would lose (156.00) from holding Citigroup or give up 2.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Citigroup  vs.  Del Monte Pacific

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Del Monte Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Del Monte Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Citigroup and Del Monte

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

The idea behind Citigroup and Del Monte Pacific 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..