Correlation Between Citigroup and DRQ Old

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

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

Diversification Opportunities for Citigroup and DRQ Old

-0.56

Correlation Coefficient

Citigroup  DRQ Old

Excellent diversification

The 3 months correlation between Citigroup and DRQ is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and DRQ Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRQ Old 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 DRQ Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRQ Old has no effect on the direction of Citigroup i.e., Citigroup and DRQ Old go up and down completely randomly.

Pair Corralation between Citigroup and DRQ Old

If you would invest  6,122  in Citigroup on October 25, 2024 and sell it today you would earn a total of  2,047  from holding Citigroup or generate 33.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.67%
Values	Daily Returns

Citigroup  vs.  DRQ Old

Citigroup

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 21 (%) 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.

DRQ Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DRQ Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, DRQ Old is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Citigroup and DRQ Old

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

The idea behind Citigroup and DRQ Old 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.