Correlation Between Citigroup and PARTS ID

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

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

Diversification Opportunities for Citigroup and PARTS ID

-0.22

Correlation Coefficient

Citigroup  PARTS ID

Very good diversification

The 3 months correlation between Citigroup and PARTS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PARTS ID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARTS ID 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 PARTS ID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARTS ID has no effect on the direction of Citigroup i.e., Citigroup and PARTS ID go up and down completely randomly.

Pair Corralation between Citigroup and PARTS ID

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.02 times less return on investment than PARTS ID. But when comparing it to its historical volatility, Citigroup is 5.22 times less risky than PARTS ID. It trades about 0.07 of its potential returns per unit of risk. PARTS ID is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  48.00  in PARTS ID on October 10, 2024 and sell it today you would lose (6.00) from holding PARTS ID or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	22.62%
Values	Daily Returns

Citigroup  vs.  PARTS ID

Citigroup

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

PARTS ID

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Citigroup and PARTS ID

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

The idea behind Citigroup and PARTS ID 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.