Correlation Between Citigroup and Power Assets

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

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

Diversification Opportunities for Citigroup and Power Assets

0.65

Correlation Coefficient

Citigroup  Power Assets

Poor diversification

The 3 months correlation between Citigroup and Power is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings 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 Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of Citigroup i.e., Citigroup and Power Assets go up and down completely randomly.

Pair Corralation between Citigroup and Power Assets

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Power Assets. In addition to that, Citigroup is 1.13 times more volatile than Power Assets Holdings. It trades about -0.02 of its total potential returns per unit of risk. Power Assets Holdings is currently generating about 0.37 per unit of volatility. If you would invest  615.00  in Power Assets Holdings on October 1, 2024 and sell it today you would earn a total of  45.00  from holding Power Assets Holdings or generate 7.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

Citigroup  vs.  Power Assets Holdings

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Power Assets Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Power Assets Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Power Assets reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Power Assets

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

The idea behind Citigroup and Power Assets Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.