Correlation Between Citigroup and IAnthus Capital

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

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

Diversification Opportunities for Citigroup and IAnthus Capital

-0.88

Correlation Coefficient

Citigroup  IAnthus Capital

Pay attention - limited upside

The 3 months correlation between Citigroup and IAnthus is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and iAnthus Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iAnthus Capital Holdings 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 IAnthus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iAnthus Capital Holdings has no effect on the direction of Citigroup i.e., Citigroup and IAnthus Capital go up and down completely randomly.

Pair Corralation between Citigroup and IAnthus Capital

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the IAnthus Capital. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 18.2 times less risky than IAnthus Capital. The stock trades about -0.06 of its potential returns per unit of risk. The iAnthus Capital Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.50  in iAnthus Capital Holdings on October 7, 2024 and sell it today you would earn a total of  0.10  from holding iAnthus Capital Holdings or generate 20.0% return on investment over 90 days.

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

Citigroup  vs.  iAnthus Capital Holdings

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

iAnthus Capital Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iAnthus Capital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IAnthus Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and IAnthus Capital

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

The idea behind Citigroup and iAnthus Capital Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.