Correlation Between Citigroup and FWBI Old

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

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

Diversification Opportunities for Citigroup and FWBI Old

0.0

Correlation Coefficient

Citigroup  FWBI Old

Pay attention - limited upside

The 3 months correlation between Citigroup and FWBI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and FWBI Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FWBI Old 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 FWBI Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FWBI Old has no effect on the direction of Citigroup i.e., Citigroup and FWBI Old go up and down completely randomly.

Pair Corralation between Citigroup and FWBI Old

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.21 times more return on investment than FWBI Old. However, Citigroup is 4.66 times less risky than FWBI Old. It trades about 0.07 of its potential returns per unit of risk. FWBI Old is currently generating about -0.17 per unit of risk. If you would invest  4,550  in Citigroup on October 10, 2024 and sell it today you would earn a total of  2,818  from holding Citigroup or generate 61.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	26.06%
Values	Daily Returns

Citigroup  vs.  FWBI Old

Citigroup

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

FWBI Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FWBI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, FWBI Old is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citigroup and FWBI Old

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

The idea behind Citigroup and FWBI Old 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.