Correlation Between Citigroup and Homeco Daily

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

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

Diversification Opportunities for Citigroup and Homeco Daily

0.62

Correlation Coefficient

Citigroup  Homeco Daily

Poor diversification

The 3 months correlation between Citigroup and Homeco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Homeco Daily Needs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeco Daily Needs 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 Homeco Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeco Daily Needs has no effect on the direction of Citigroup i.e., Citigroup and Homeco Daily go up and down completely randomly.

Pair Corralation between Citigroup and Homeco Daily

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.98 times less return on investment than Homeco Daily. In addition to that, Citigroup is 1.72 times more volatile than Homeco Daily Needs. It trades about 0.01 of its total potential returns per unit of risk. Homeco Daily Needs is currently generating about 0.08 per unit of volatility. If you would invest  113.00  in Homeco Daily Needs on December 29, 2024 and sell it today you would earn a total of  6.00  from holding Homeco Daily Needs or generate 5.31% return on investment over 90 days.

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

Citigroup  vs.  Homeco Daily Needs

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.

Homeco Daily Needs

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Homeco Daily Needs are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Homeco Daily is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and Homeco Daily

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

The idea behind Citigroup and Homeco Daily Needs 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.