Correlation Between Citigroup and Aston Montag

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

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

Diversification Opportunities for Citigroup and Aston Montag

0.88

Correlation Coefficient

Citigroup  Aston Montag

Very poor diversification

The 3 months correlation between Citigroup and Aston is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Aston Montag Caldwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Montag Caldwell 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 Aston Montag. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Montag Caldwell has no effect on the direction of Citigroup i.e., Citigroup and Aston Montag go up and down completely randomly.

Pair Corralation between Citigroup and Aston Montag

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.21 times less return on investment than Aston Montag. In addition to that, Citigroup is 1.15 times more volatile than Aston Montag Caldwell. It trades about 0.2 of its total potential returns per unit of risk. Aston Montag Caldwell is currently generating about 0.28 per unit of volatility. If you would invest  1,344  in Aston Montag Caldwell on September 16, 2024 and sell it today you would earn a total of  54.00  from holding Aston Montag Caldwell or generate 4.02% return on investment over 90 days.

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

Citigroup  vs.  Aston Montag Caldwell

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.

Aston Montag Caldwell

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aston Montag Caldwell are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Aston Montag is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Aston Montag

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

The idea behind Citigroup and Aston Montag Caldwell 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.