Correlation Between Citigroup and Ambassador Fund

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

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

Diversification Opportunities for Citigroup and Ambassador Fund

0.84

Correlation Coefficient

Citigroup  Ambassador Fund

Very poor diversification

The 3 months correlation between Citigroup and Ambassador is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ambassador Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambassador Fund 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 Ambassador Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambassador Fund has no effect on the direction of Citigroup i.e., Citigroup and Ambassador Fund go up and down completely randomly.

Pair Corralation between Citigroup and Ambassador Fund

Taking into account the 90-day investment horizon Citigroup is expected to generate 22.4 times more return on investment than Ambassador Fund. However, Citigroup is 22.4 times more volatile than Ambassador Fund. It trades about 0.41 of its potential returns per unit of risk. Ambassador Fund is currently generating about 0.4 per unit of risk. If you would invest  7,100  in Citigroup on October 25, 2024 and sell it today you would earn a total of  1,069  from holding Citigroup or generate 15.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

Citigroup  vs.  Ambassador Fund

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.

Ambassador Fund

Risk-Adjusted Performance

47 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Ambassador Fund are ranked lower than 47 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ambassador Fund 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 Ambassador Fund

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

The idea behind Citigroup and Ambassador Fund 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.