Correlation Between Citigroup and Destinations Low

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

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

Diversification Opportunities for Citigroup and Destinations Low

-0.18

Correlation Coefficient

Citigroup  Destinations Low

Good diversification

The 3 months correlation between Citigroup and Destinations is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Destinations Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations Low Duration 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 Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations Low Duration has no effect on the direction of Citigroup i.e., Citigroup and Destinations Low go up and down completely randomly.

Pair Corralation between Citigroup and Destinations Low

Taking into account the 90-day investment horizon Citigroup is expected to generate 10.56 times more return on investment than Destinations Low. However, Citigroup is 10.56 times more volatile than Destinations Low Duration. It trades about 0.15 of its potential returns per unit of risk. Destinations Low Duration is currently generating about -0.09 per unit of risk. If you would invest  6,292  in Citigroup on October 10, 2024 and sell it today you would earn a total of  1,076  from holding Citigroup or generate 17.1% return on investment over 90 days.

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

Citigroup  vs.  Destinations Low Duration

Citigroup

Risk-Adjusted Performance

11 of 100

Good

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

Destinations Low Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destinations Low Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Destinations Low is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Destinations Low

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

The idea behind Citigroup and Destinations Low Duration 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 Global Correlations module to find global opportunities by holding instruments from different markets.