Correlation Between Citigroup and Fidelity Canada

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

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

Diversification Opportunities for Citigroup and Fidelity Canada

0.76

Correlation Coefficient

Citigroup  Fidelity Canada

Poor diversification

The 3 months correlation between Citigroup and Fidelity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Fidelity Canada Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canada 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 Fidelity Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canada has no effect on the direction of Citigroup i.e., Citigroup and Fidelity Canada go up and down completely randomly.

Pair Corralation between Citigroup and Fidelity Canada

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.19 times less return on investment than Fidelity Canada. In addition to that, Citigroup is 2.14 times more volatile than Fidelity Canada Fund. It trades about 0.01 of its total potential returns per unit of risk. Fidelity Canada Fund is currently generating about 0.04 per unit of volatility. If you would invest  6,542  in Fidelity Canada Fund on December 29, 2024 and sell it today you would earn a total of  126.00  from holding Fidelity Canada Fund or generate 1.93% return on investment over 90 days.

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

Citigroup  vs.  Fidelity Canada Fund

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fidelity Canada

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Canada Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fidelity Canada 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 Fidelity Canada

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

The idea behind Citigroup and Fidelity Canada 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.