Correlation Between Citigroup and Barings Corporate

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

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

Diversification Opportunities for Citigroup and Barings Corporate

0.76

Correlation Coefficient

Citigroup  Barings Corporate

Poor diversification

The 3 months correlation between Citigroup and Barings is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Barings Corporate Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Corporate 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 Barings Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Corporate has no effect on the direction of Citigroup i.e., Citigroup and Barings Corporate go up and down completely randomly.

Pair Corralation between Citigroup and Barings Corporate

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.19 times less return on investment than Barings Corporate. But when comparing it to its historical volatility, Citigroup is 1.02 times less risky than Barings Corporate. It trades about 0.04 of its potential returns per unit of risk. Barings Corporate Investors is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,935  in Barings Corporate Investors on December 20, 2024 and sell it today you would earn a total of  95.00  from holding Barings Corporate Investors or generate 4.91% return on investment over 90 days.

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

Citigroup  vs.  Barings Corporate Investors

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Barings Corporate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Corporate Investors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Barings Corporate is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citigroup and Barings Corporate

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

The idea behind Citigroup and Barings Corporate Investors 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.