Correlation Between Citigroup and FlexShares Morningstar

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

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

Diversification Opportunities for Citigroup and FlexShares Morningstar

0.33

Correlation Coefficient

Citigroup  FlexShares Morningstar

Weak diversification

The 3 months correlation between Citigroup and FlexShares is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and FlexShares Morningstar Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Morningstar 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 FlexShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Morningstar has no effect on the direction of Citigroup i.e., Citigroup and FlexShares Morningstar go up and down completely randomly.

Pair Corralation between Citigroup and FlexShares Morningstar

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.23 times less return on investment than FlexShares Morningstar. In addition to that, Citigroup is 2.62 times more volatile than FlexShares Morningstar Global. It trades about 0.01 of its total potential returns per unit of risk. FlexShares Morningstar Global is currently generating about 0.16 per unit of volatility. If you would invest  3,591  in FlexShares Morningstar Global on December 30, 2024 and sell it today you would earn a total of  281.00  from holding FlexShares Morningstar Global or generate 7.83% 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.  FlexShares Morningstar Global

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.

FlexShares Morningstar

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Morningstar Global are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, FlexShares Morningstar may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and FlexShares Morningstar

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

The idea behind Citigroup and FlexShares Morningstar Global 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.