Correlation Between Citigroup and Global Centrated

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

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

Diversification Opportunities for Citigroup and Global Centrated

0.08

Correlation Coefficient

Citigroup  Global Centrated

Significant diversification

The 3 months correlation between Citigroup and Global is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Global Centrated Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Centrated Por 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 Global Centrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Centrated Por has no effect on the direction of Citigroup i.e., Citigroup and Global Centrated go up and down completely randomly.

Pair Corralation between Citigroup and Global Centrated

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.79 times more return on investment than Global Centrated. However, Citigroup is 1.79 times more volatile than Global Centrated Portfolio. It trades about 0.11 of its potential returns per unit of risk. Global Centrated Portfolio is currently generating about 0.06 per unit of risk. If you would invest  6,332  in Citigroup on October 20, 2024 and sell it today you would earn a total of  1,667  from holding Citigroup or generate 26.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Citigroup  vs.  Global Centrated Portfolio

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

Global Centrated Por

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Centrated Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Global Centrated 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 Global Centrated

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

The idea behind Citigroup and Global Centrated Portfolio 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.