Correlation Between Citigroup and HUGE Old

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

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

Diversification Opportunities for Citigroup and HUGE Old

-0.84

Correlation Coefficient

Citigroup  HUGE Old

Pay attention - limited upside

The 3 months correlation between Citigroup and HUGE is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and HUGE Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUGE Old 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 HUGE Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUGE Old has no effect on the direction of Citigroup i.e., Citigroup and HUGE Old go up and down completely randomly.

Pair Corralation between Citigroup and HUGE Old

If you would invest  7,135  in Citigroup on October 26, 2024 and sell it today you would earn a total of  1,034  from holding Citigroup or generate 14.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	5.56%
Values	Daily Returns

Citigroup  vs.  HUGE Old

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

HUGE Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUGE Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, HUGE Old 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 HUGE Old

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

The idea behind Citigroup and HUGE Old 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.