Correlation Between Citigroup and Hollywood Intermediate

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

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

Diversification Opportunities for Citigroup and Hollywood Intermediate

0.0

Correlation Coefficient

Citigroup  Hollywood Intermediate

Pay attention - limited upside

The 3 months correlation between Citigroup and Hollywood is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Hollywood Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Intermediate 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 Hollywood Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Intermediate has no effect on the direction of Citigroup i.e., Citigroup and Hollywood Intermediate go up and down completely randomly.

Pair Corralation between Citigroup and Hollywood Intermediate

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.36 times more return on investment than Hollywood Intermediate. However, Citigroup is 2.76 times less risky than Hollywood Intermediate. It trades about 0.06 of its potential returns per unit of risk. Hollywood Intermediate is currently generating about -0.04 per unit of risk. If you would invest  4,708  in Citigroup on October 11, 2024 and sell it today you would earn a total of  2,618  from holding Citigroup or generate 55.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Hollywood Intermediate

Citigroup

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Hollywood Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hollywood Intermediate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Hollywood Intermediate is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citigroup and Hollywood Intermediate

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

The idea behind Citigroup and Hollywood Intermediate 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.