Correlation Between Citigroup and Kingfisher PLC

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

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

Diversification Opportunities for Citigroup and Kingfisher PLC

-0.19

Correlation Coefficient

Citigroup  Kingfisher PLC

Good diversification

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

Pair Corralation between Citigroup and Kingfisher PLC

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.27 times less return on investment than Kingfisher PLC. But when comparing it to its historical volatility, Citigroup is 1.2 times less risky than Kingfisher PLC. It trades about 0.01 of its potential returns per unit of risk. Kingfisher PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  24,550  in Kingfisher PLC on December 30, 2024 and sell it today you would earn a total of  600.00  from holding Kingfisher PLC or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Citigroup  vs.  Kingfisher PLC

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.

Kingfisher PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kingfisher PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Kingfisher PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Kingfisher PLC

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

The idea behind Citigroup and Kingfisher PLC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.