Correlation Between Citigroup and Columbia Integrated

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

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

Diversification Opportunities for Citigroup and Columbia Integrated

0.74

Correlation Coefficient

Citigroup  Columbia Integrated

Poor diversification

The 3 months correlation between Citigroup and Columbia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Columbia Integrated Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Integrated Small 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 Columbia Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Integrated Small has no effect on the direction of Citigroup i.e., Citigroup and Columbia Integrated go up and down completely randomly.

Pair Corralation between Citigroup and Columbia Integrated

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.24 times less return on investment than Columbia Integrated. In addition to that, Citigroup is 1.38 times more volatile than Columbia Integrated Small. It trades about 0.12 of its total potential returns per unit of risk. Columbia Integrated Small is currently generating about 0.21 per unit of volatility. If you would invest  1,576  in Columbia Integrated Small on September 30, 2024 and sell it today you would earn a total of  192.00  from holding Columbia Integrated Small or generate 12.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.63%
Values	Daily Returns

Citigroup  vs.  Columbia Integrated Small

Citigroup

Risk-Adjusted Performance

9 of 100

OK

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Columbia Integrated Small

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Columbia Integrated Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak essential indicators, Columbia Integrated showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Columbia Integrated

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

The idea behind Citigroup and Columbia Integrated Small 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.