Correlation Between Citigroup and Jaws Hurricane

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

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

Diversification Opportunities for Citigroup and Jaws Hurricane

0.93

Correlation Coefficient

Citigroup  Jaws Hurricane

Almost no diversification

The 3 months correlation between Citigroup and Jaws is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Jaws Hurricane Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaws Hurricane Acqui 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 Jaws Hurricane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaws Hurricane Acqui has no effect on the direction of Citigroup i.e., Citigroup and Jaws Hurricane go up and down completely randomly.

Pair Corralation between Citigroup and Jaws Hurricane

Taking into account the 90-day investment horizon Citigroup is expected to generate 16.05 times more return on investment than Jaws Hurricane. However, Citigroup is 16.05 times more volatile than Jaws Hurricane Acquisition. It trades about 0.08 of its potential returns per unit of risk. Jaws Hurricane Acquisition is currently generating about 0.23 per unit of risk. If you would invest  4,112  in Citigroup on September 18, 2024 and sell it today you would earn a total of  2,998  from holding Citigroup or generate 72.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	23.99%
Values	Daily Returns

Citigroup  vs.  Jaws Hurricane Acquisition

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) 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.

Jaws Hurricane Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaws Hurricane Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Jaws Hurricane is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Jaws Hurricane

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

The idea behind Citigroup and Jaws Hurricane Acquisition 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.