Correlation Between Citigroup and IncomeShares META

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

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

Diversification Opportunities for Citigroup and IncomeShares META

0.87

Correlation Coefficient

Citigroup  IncomeShares META

Very poor diversification

The 3 months correlation between Citigroup and IncomeShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and IncomeShares META Options in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IncomeShares META Options 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 IncomeShares META. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IncomeShares META Options has no effect on the direction of Citigroup i.e., Citigroup and IncomeShares META go up and down completely randomly.

Pair Corralation between Citigroup and IncomeShares META

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.86 times more return on investment than IncomeShares META. However, Citigroup is 1.16 times less risky than IncomeShares META. It trades about 0.05 of its potential returns per unit of risk. IncomeShares META Options is currently generating about 0.03 per unit of risk. If you would invest  7,086  in Citigroup on December 25, 2024 and sell it today you would earn a total of  361.00  from holding Citigroup or generate 5.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  IncomeShares META Options

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in April 2025.

IncomeShares META Options

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IncomeShares META Options are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IncomeShares META is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and IncomeShares META

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

The idea behind Citigroup and IncomeShares META Options 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..