Correlation Between Citigroup and Liveworld

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

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

Diversification Opportunities for Citigroup and Liveworld

-0.37

Correlation Coefficient

Citigroup  Liveworld

Very good diversification

The 3 months correlation between Citigroup and Liveworld is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Liveworld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liveworld 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 Liveworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liveworld has no effect on the direction of Citigroup i.e., Citigroup and Liveworld go up and down completely randomly.

Pair Corralation between Citigroup and Liveworld

If you would invest  6,815  in Citigroup on September 15, 2024 and sell it today you would earn a total of  286.00  from holding Citigroup or generate 4.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Citigroup  vs.  Liveworld

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Liveworld

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liveworld has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Liveworld is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Liveworld

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

The idea behind Citigroup and Liveworld 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.