Correlation Between Citigroup and Investment

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

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

Diversification Opportunities for Citigroup and Investment

-0.65

Correlation Coefficient

Citigroup  Investment

Excellent diversification

The 3 months correlation between Citigroup and Investment is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Investment AB Latour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment AB Latour 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment AB Latour has no effect on the direction of Citigroup i.e., Citigroup and Investment go up and down completely randomly.

Pair Corralation between Citigroup and Investment

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.96 times more return on investment than Investment. However, Citigroup is 2.96 times more volatile than Investment AB Latour. It trades about 0.25 of its potential returns per unit of risk. Investment AB Latour is currently generating about -0.16 per unit of risk. If you would invest  6,360  in Citigroup on October 26, 2024 and sell it today you would earn a total of  1,809  from holding Citigroup or generate 28.44% return on investment over 90 days.

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

Citigroup  vs.  Investment AB Latour

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

Investment AB Latour

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investment AB Latour has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Investment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and Investment

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

The idea behind Citigroup and Investment AB Latour 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.