Correlation Between Citigroup and LPN Development

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

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

Diversification Opportunities for Citigroup and LPN Development

-0.84

Correlation Coefficient

Citigroup  LPN Development

Pay attention - limited upside

The 3 months correlation between Citigroup and LPN is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LPN Development Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPN Development Public 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 LPN Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPN Development Public has no effect on the direction of Citigroup i.e., Citigroup and LPN Development go up and down completely randomly.

Pair Corralation between Citigroup and LPN Development

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the LPN Development. In addition to that, Citigroup is 1.79 times more volatile than LPN Development Public. It trades about -0.04 of its total potential returns per unit of risk. LPN Development Public is currently generating about -0.04 per unit of volatility. If you would invest  220.00  in LPN Development Public on December 1, 2024 and sell it today you would lose (2.00) from holding LPN Development Public or give up 0.91% of portfolio value over 90 days.

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

Citigroup  vs.  LPN Development Public

Citigroup

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

LPN Development Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days LPN Development Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Citigroup and LPN Development

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

The idea behind Citigroup and LPN Development Public 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.