Correlation Between Citigroup and Source FTSE

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

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

Diversification Opportunities for Citigroup and Source FTSE

0.0

Correlation Coefficient

Citigroup  Source FTSE

Pay attention - limited upside

The 3 months correlation between Citigroup and Source is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Source FTSE RAFI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Source FTSE RAFI 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 Source FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Source FTSE RAFI has no effect on the direction of Citigroup i.e., Citigroup and Source FTSE go up and down completely randomly.

Pair Corralation between Citigroup and Source FTSE

If you would invest  6,227  in Citigroup on September 29, 2024 and sell it today you would earn a total of  873.00  from holding Citigroup or generate 14.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Citigroup  vs.  Source FTSE RAFI

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.

Source FTSE RAFI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Source FTSE RAFI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Source FTSE is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and Source FTSE

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

The idea behind Citigroup and Source FTSE RAFI 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.