Correlation Between Citigroup and Mobile Tornado

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

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

Diversification Opportunities for Citigroup and Mobile Tornado

0.64

Correlation Coefficient

Citigroup  Mobile Tornado

Poor diversification

The 3 months correlation between Citigroup and Mobile is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Mobile Tornado Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Tornado Group 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 Mobile Tornado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Tornado Group has no effect on the direction of Citigroup i.e., Citigroup and Mobile Tornado go up and down completely randomly.

Pair Corralation between Citigroup and Mobile Tornado

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.28 times less return on investment than Mobile Tornado. But when comparing it to its historical volatility, Citigroup is 8.25 times less risky than Mobile Tornado. It trades about 0.11 of its potential returns per unit of risk. Mobile Tornado Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Mobile Tornado Group on September 28, 2024 and sell it today you would earn a total of  40.00  from holding Mobile Tornado Group or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.63%
Values	Daily Returns

Citigroup  vs.  Mobile Tornado Group

Citigroup

Risk-Adjusted Performance

9 of 100

OK

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

Mobile Tornado Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mobile Tornado Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Mobile Tornado exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Mobile Tornado

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

The idea behind Citigroup and Mobile Tornado Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.