Correlation Between Citigroup and Guardian Canadian

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

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

Diversification Opportunities for Citigroup and Guardian Canadian

0.88

Correlation Coefficient

Citigroup  Guardian Canadian

Very poor diversification

The 3 months correlation between Citigroup and Guardian is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Guardian Canadian Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Canadian Focused 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 Guardian Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Canadian Focused has no effect on the direction of Citigroup i.e., Citigroup and Guardian Canadian go up and down completely randomly.

Pair Corralation between Citigroup and Guardian Canadian

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.57 times more return on investment than Guardian Canadian. However, Citigroup is 2.57 times more volatile than Guardian Canadian Focused. It trades about 0.18 of its potential returns per unit of risk. Guardian Canadian Focused is currently generating about 0.28 per unit of risk. If you would invest  5,788  in Citigroup on September 15, 2024 and sell it today you would earn a total of  1,313  from holding Citigroup or generate 22.68% return on investment over 90 days.

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

Citigroup  vs.  Guardian Canadian Focused

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Guardian Canadian Focused

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Canadian Focused are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Guardian Canadian displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Guardian Canadian

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

The idea behind Citigroup and Guardian Canadian Focused 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.