Correlation Between Citigroup and Fidelity Overseas

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

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

Diversification Opportunities for Citigroup and Fidelity Overseas

0.27

Correlation Coefficient

Citigroup  Fidelity Overseas

Modest diversification

The 3 months correlation between Citigroup and Fidelity is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Fidelity Overseas Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Overseas 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 Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Overseas has no effect on the direction of Citigroup i.e., Citigroup and Fidelity Overseas go up and down completely randomly.

Pair Corralation between Citigroup and Fidelity Overseas

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.7 times less return on investment than Fidelity Overseas. In addition to that, Citigroup is 2.1 times more volatile than Fidelity Overseas Fund. It trades about 0.01 of its total potential returns per unit of risk. Fidelity Overseas Fund is currently generating about 0.15 per unit of volatility. If you would invest  6,266  in Fidelity Overseas Fund on December 29, 2024 and sell it today you would earn a total of  540.00  from holding Fidelity Overseas Fund or generate 8.62% 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.  Fidelity Overseas 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 Overseas

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Overseas Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Overseas may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and Fidelity Overseas

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

The idea behind Citigroup and Fidelity Overseas 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.