Correlation Between Citigroup and Allspring Global

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

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

Diversification Opportunities for Citigroup and Allspring Global

0.46

Correlation Coefficient

Citigroup  Allspring Global

Very weak diversification

The 3 months correlation between Citigroup and Allspring is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Allspring Global Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allspring Global Dividend 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 Allspring Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allspring Global Dividend has no effect on the direction of Citigroup i.e., Citigroup and Allspring Global go up and down completely randomly.

Pair Corralation between Citigroup and Allspring Global

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.98 times more return on investment than Allspring Global. However, Citigroup is 2.98 times more volatile than Allspring Global Dividend. It trades about 0.13 of its potential returns per unit of risk. Allspring Global Dividend is currently generating about 0.1 per unit of risk. If you would invest  6,092  in Citigroup on August 31, 2024 and sell it today you would earn a total of  995.00  from holding Citigroup or generate 16.33% return on investment over 90 days.

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

Citigroup  vs.  Allspring Global Dividend

Citigroup

Risk-Adjusted Performance

10 of 100

OK

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.

Allspring Global Dividend

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Allspring Global Dividend are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Allspring Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Allspring Global

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

The idea behind Citigroup and Allspring Global Dividend 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.