Correlation Between Citigroup and FPT Corp

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

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

Diversification Opportunities for Citigroup and FPT Corp

0.71

Correlation Coefficient

Citigroup  FPT Corp

Poor diversification

The 3 months correlation between Citigroup and FPT is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and FPT Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Corp 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 FPT Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Corp has no effect on the direction of Citigroup i.e., Citigroup and FPT Corp go up and down completely randomly.

Pair Corralation between Citigroup and FPT Corp

Taking into account the 90-day investment horizon Citigroup is expected to generate 21.92 times less return on investment than FPT Corp. But when comparing it to its historical volatility, Citigroup is 1.15 times less risky than FPT Corp. It trades about 0.02 of its potential returns per unit of risk. FPT Corp is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  13,300,000  in FPT Corp on September 22, 2024 and sell it today you would earn a total of  1,673,000  from holding FPT Corp or generate 12.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.3%
Values	Daily Returns

Citigroup  vs.  FPT Corp

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FPT Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FPT Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FPT Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and FPT Corp

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

The idea behind Citigroup and FPT Corp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.