Correlation Between Citigroup and INMED PHARMACEUTICALS

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

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

Diversification Opportunities for Citigroup and INMED PHARMACEUTICALS

0.21

Correlation Coefficient

Citigroup  INMED PHARMACEUTICALS

Modest diversification

The 3 months correlation between Citigroup and INMED is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and INMED PHARMACEUTICALS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INMED PHARMACEUTICALS INC 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 INMED PHARMACEUTICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INMED PHARMACEUTICALS INC has no effect on the direction of Citigroup i.e., Citigroup and INMED PHARMACEUTICALS go up and down completely randomly.

Pair Corralation between Citigroup and INMED PHARMACEUTICALS

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.17 times more return on investment than INMED PHARMACEUTICALS. However, Citigroup is 5.99 times less risky than INMED PHARMACEUTICALS. It trades about 0.02 of its potential returns per unit of risk. INMED PHARMACEUTICALS INC is currently generating about -0.04 per unit of risk. If you would invest  7,075  in Citigroup on September 26, 2024 and sell it today you would earn a total of  25.00  from holding Citigroup or generate 0.35% return on investment over 90 days.

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

Citigroup  vs.  INMED PHARMACEUTICALS INC

Citigroup

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

INMED PHARMACEUTICALS INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INMED PHARMACEUTICALS INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, INMED PHARMACEUTICALS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and INMED PHARMACEUTICALS

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

The idea behind Citigroup and INMED PHARMACEUTICALS INC 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.