Correlation Between Citigroup and Green Impact

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

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

Diversification Opportunities for Citigroup and Green Impact

0.04

Correlation Coefficient

Citigroup  Green Impact

Significant diversification

The 3 months correlation between Citigroup and Green is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Green Impact Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Impact Partners 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 Green Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Impact Partners has no effect on the direction of Citigroup i.e., Citigroup and Green Impact go up and down completely randomly.

Pair Corralation between Citigroup and Green Impact

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.68 times less return on investment than Green Impact. In addition to that, Citigroup is 1.36 times more volatile than Green Impact Partners. It trades about 0.03 of its total potential returns per unit of risk. Green Impact Partners is currently generating about 0.06 per unit of volatility. If you would invest  229.00  in Green Impact Partners on December 27, 2024 and sell it today you would earn a total of  11.00  from holding Green Impact Partners or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Citigroup  vs.  Green Impact Partners

Citigroup

Risk-Adjusted Performance

Insignificant

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.

Green Impact Partners

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Green Impact Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Green Impact is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and Green Impact

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

The idea behind Citigroup and Green Impact Partners 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.