Correlation Between Citigroup and FlexiInternational

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

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

Diversification Opportunities for Citigroup and FlexiInternational

0.31

Correlation Coefficient

Citigroup  FlexiInternational

Weak diversification

The 3 months correlation between Citigroup and FlexiInternational is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and FlexiInternational Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexiInternational 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 FlexiInternational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexiInternational has no effect on the direction of Citigroup i.e., Citigroup and FlexiInternational go up and down completely randomly.

Pair Corralation between Citigroup and FlexiInternational

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.85 times more return on investment than FlexiInternational. However, Citigroup is 1.17 times less risky than FlexiInternational. It trades about 0.38 of its potential returns per unit of risk. FlexiInternational Software is currently generating about 0.23 per unit of risk. If you would invest  7,135  in Citigroup on October 27, 2024 and sell it today you would earn a total of  1,013  from holding Citigroup or generate 14.2% return on investment over 90 days.

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

Citigroup  vs.  FlexiInternational Software

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.

FlexiInternational

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FlexiInternational Software are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, FlexiInternational demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and FlexiInternational

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

The idea behind Citigroup and FlexiInternational Software 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.