Correlation Between Citigroup and INTEL CDR

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

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

Diversification Opportunities for Citigroup and INTEL CDR

0.19

Correlation Coefficient

Citigroup  INTEL CDR

Average diversification

The 3 months correlation between Citigroup and INTEL is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and INTEL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL CDR 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 INTEL CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL CDR has no effect on the direction of Citigroup i.e., Citigroup and INTEL CDR go up and down completely randomly.

Pair Corralation between Citigroup and INTEL CDR

Taking into account the 90-day investment horizon Citigroup is expected to generate 10.03 times less return on investment than INTEL CDR. But when comparing it to its historical volatility, Citigroup is 2.21 times less risky than INTEL CDR. It trades about 0.01 of its potential returns per unit of risk. INTEL CDR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,164  in INTEL CDR on December 29, 2024 and sell it today you would earn a total of  159.00  from holding INTEL CDR or generate 13.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Citigroup  vs.  INTEL CDR

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

INTEL CDR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INTEL CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, INTEL CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and INTEL CDR

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

The idea behind Citigroup and INTEL CDR 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.