Correlation Between Citigroup and Lever Global

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

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

Diversification Opportunities for Citigroup and Lever Global

0.82

Correlation Coefficient

Citigroup  Lever Global

Very poor diversification

The 3 months correlation between Citigroup and Lever is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lever Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lever Global 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 Lever Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lever Global has no effect on the direction of Citigroup i.e., Citigroup and Lever Global go up and down completely randomly.

Pair Corralation between Citigroup and Lever Global

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.76 times less return on investment than Lever Global. But when comparing it to its historical volatility, Citigroup is 4.74 times less risky than Lever Global. It trades about 0.06 of its potential returns per unit of risk. Lever Global is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Lever Global on October 3, 2024 and sell it today you would earn a total of  248.00  from holding Lever Global or generate 330.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	60.2%
Values	Daily Returns

Citigroup  vs.  Lever Global

Citigroup

Risk-Adjusted Performance

10 of 100

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 unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Lever Global

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lever Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Lever Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Lever Global

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

The idea behind Citigroup and Lever Global 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.