Correlation Between Citigroup and ALPS International

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

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

Diversification Opportunities for Citigroup and ALPS International

0.76

Correlation Coefficient

Citigroup  ALPS International

Poor diversification

The 3 months correlation between Citigroup and ALPS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ALPS International Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPS International Sector 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 ALPS International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPS International Sector has no effect on the direction of Citigroup i.e., Citigroup and ALPS International go up and down completely randomly.

Pair Corralation between Citigroup and ALPS International

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the ALPS International. In addition to that, Citigroup is 2.25 times more volatile than ALPS International Sector. It trades about -0.2 of its total potential returns per unit of risk. ALPS International Sector is currently generating about 0.42 per unit of volatility. If you would invest  2,965  in ALPS International Sector on December 5, 2024 and sell it today you would earn a total of  272.00  from holding ALPS International Sector or generate 9.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  ALPS International Sector

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

ALPS International Sector

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ALPS International Sector are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALPS International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and ALPS International

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

The idea behind Citigroup and ALPS International Sector 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.