Correlation Between Citigroup and William Blair

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

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

Diversification Opportunities for Citigroup and William Blair

0.27

Correlation Coefficient

Citigroup  William Blair

Modest diversification

The 3 months correlation between Citigroup and William is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and William Blair Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Large 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 William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Large has no effect on the direction of Citigroup i.e., Citigroup and William Blair go up and down completely randomly.

Pair Corralation between Citigroup and William Blair

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.5 times more return on investment than William Blair. However, Citigroup is 1.5 times more volatile than William Blair Large. It trades about 0.04 of its potential returns per unit of risk. William Blair Large is currently generating about -0.14 per unit of risk. If you would invest  6,929  in Citigroup on December 21, 2024 and sell it today you would earn a total of  253.00  from holding Citigroup or generate 3.65% return on investment over 90 days.

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

Citigroup  vs.  William Blair Large

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

William Blair Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Blair Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Citigroup and William Blair

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

The idea behind Citigroup and William Blair Large 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 Transaction History module to view history of all your transactions and understand their impact on performance.