Correlation Between Citigroup and IA Clarington

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

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

Diversification Opportunities for Citigroup and IA Clarington

0.39

Correlation Coefficient

Citigroup  IA Clarington

Weak diversification

The 3 months correlation between Citigroup and IFRF is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and IA Clarington Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Clarington Floating 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 IA Clarington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Clarington Floating has no effect on the direction of Citigroup i.e., Citigroup and IA Clarington go up and down completely randomly.

Pair Corralation between Citigroup and IA Clarington

Taking into account the 90-day investment horizon Citigroup is expected to generate 8.07 times more return on investment than IA Clarington. However, Citigroup is 8.07 times more volatile than IA Clarington Floating. It trades about 0.05 of its potential returns per unit of risk. IA Clarington Floating is currently generating about 0.0 per unit of risk. If you would invest  7,186  in Citigroup on October 8, 2024 and sell it today you would earn a total of  88.00  from holding Citigroup or generate 1.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Citigroup  vs.  IA Clarington Floating

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.

IA Clarington Floating

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IA Clarington Floating has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IA Clarington is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and IA Clarington

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

The idea behind Citigroup and IA Clarington Floating 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.