Correlation Between Citigroup and LeoNovus

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

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

Diversification Opportunities for Citigroup and LeoNovus

0.0

Correlation Coefficient

Citigroup  LeoNovus

Pay attention - limited upside

The 3 months correlation between Citigroup and LeoNovus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LeoNovus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeoNovus 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 LeoNovus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeoNovus has no effect on the direction of Citigroup i.e., Citigroup and LeoNovus go up and down completely randomly.

Pair Corralation between Citigroup and LeoNovus

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.78 times less return on investment than LeoNovus. But when comparing it to its historical volatility, Citigroup is 7.07 times less risky than LeoNovus. It trades about 0.06 of its potential returns per unit of risk. LeoNovus is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5.00  in LeoNovus on October 11, 2024 and sell it today you would lose (1.00) from holding LeoNovus or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Citigroup  vs.  LeoNovus

Citigroup

Risk-Adjusted Performance

9 of 100

Good

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.

LeoNovus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LeoNovus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, LeoNovus is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Citigroup and LeoNovus

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

The idea behind Citigroup and LeoNovus 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.