Correlation Between Citigroup and Strategy Shares

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

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

Diversification Opportunities for Citigroup and Strategy Shares

-0.09

Correlation Coefficient

Citigroup  Strategy Shares

Good diversification

The 3 months correlation between Citigroup and Strategy is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Strategy Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares 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 Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares has no effect on the direction of Citigroup i.e., Citigroup and Strategy Shares go up and down completely randomly.

Pair Corralation between Citigroup and Strategy Shares

Taking into account the 90-day investment horizon Citigroup is expected to generate 98.03 times less return on investment than Strategy Shares. But when comparing it to its historical volatility, Citigroup is 115.06 times less risky than Strategy Shares. It trades about 0.25 of its potential returns per unit of risk. Strategy Shares is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Strategy Shares on October 24, 2024 and sell it today you would earn a total of  2,507  from holding Strategy Shares or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	36.67%
Values	Daily Returns

Citigroup  vs.  Strategy Shares

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

Strategy Shares

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Strategy Shares displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Strategy Shares

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

The idea behind Citigroup and Strategy Shares 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.