Correlation Between Citigroup and Diversified United

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Can any of the company-specific risk be diversified away by investing in both Citigroup and Diversified United 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 Diversified United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Diversified United Investment, you can compare the effects of market volatilities on Citigroup and Diversified United 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 Diversified United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Diversified United.

Diversification Opportunities for Citigroup and Diversified United

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Citigroup and Diversified is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Diversified United Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified United 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 Diversified United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified United has no effect on the direction of Citigroup i.e., Citigroup and Diversified United go up and down completely randomly.

Pair Corralation between Citigroup and Diversified United

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.63 times more return on investment than Diversified United. However, Citigroup is 2.63 times more volatile than Diversified United Investment. It trades about 0.13 of its potential returns per unit of risk. Diversified United Investment is currently generating about 0.01 per unit of risk. If you would invest  7,038  in Citigroup on November 28, 2024 and sell it today you would earn a total of  869.00  from holding Citigroup or generate 12.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.33%
ValuesDaily Returns

Citigroup  vs.  Diversified United Investment

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.
Diversified United 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Diversified United Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Diversified United is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Citigroup and Diversified United Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Diversified United

The main advantage of trading using opposite Citigroup and Diversified United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Diversified United 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 Diversified United will offset losses from the drop in Diversified United's long position.
The idea behind Citigroup and Diversified United Investment 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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