Correlation Between Citigroup and Delaware Limited

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

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

Diversification Opportunities for Citigroup and Delaware Limited

0.74

Correlation Coefficient

Citigroup  Delaware Limited

Poor diversification

The 3 months correlation between Citigroup and Delaware is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Delaware Limited Term Diversif in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Limited Term 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 Delaware Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Limited Term has no effect on the direction of Citigroup i.e., Citigroup and Delaware Limited go up and down completely randomly.

Pair Corralation between Citigroup and Delaware Limited

Taking into account the 90-day investment horizon Citigroup is expected to generate 14.17 times more return on investment than Delaware Limited. However, Citigroup is 14.17 times more volatile than Delaware Limited Term Diversified. It trades about 0.46 of its potential returns per unit of risk. Delaware Limited Term Diversified is currently generating about 0.2 per unit of risk. If you would invest  6,977  in Citigroup on October 24, 2024 and sell it today you would earn a total of  1,192  from holding Citigroup or generate 17.08% return on investment over 90 days.

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

Citigroup  vs.  Delaware Limited Term Diversif

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

Delaware Limited Term

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Limited Term Diversified are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Delaware Limited 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 Delaware Limited

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

The idea behind Citigroup and Delaware Limited Term Diversified 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 Transaction History module to view history of all your transactions and understand their impact on performance.