Correlation Between Citigroup and Great-west Securefoundation

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

By analyzing existing cross correlation between Citigroup and Great West Securefoundation Balanced, you can compare the effects of market volatilities on Citigroup and Great-west Securefoundation 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 Great-west Securefoundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Great-west Securefoundation.

Diversification Opportunities for Citigroup and Great-west Securefoundation

-0.12

Correlation Coefficient

Citigroup  Great-west Securefoundation

Good diversification

The 3 months correlation between Citigroup and Great-west is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Great West Securefoundation Ba in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great-west Securefoundation 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 Great-west Securefoundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great-west Securefoundation has no effect on the direction of Citigroup i.e., Citigroup and Great-west Securefoundation go up and down completely randomly.

Pair Corralation between Citigroup and Great-west Securefoundation

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Great-west Securefoundation. In addition to that, Citigroup is 4.71 times more volatile than Great West Securefoundation Balanced. It trades about -0.2 of its total potential returns per unit of risk. Great West Securefoundation Balanced is currently generating about -0.01 per unit of volatility. If you would invest  728.00  in Great West Securefoundation Balanced on December 5, 2024 and sell it today you would lose (1.00) from holding Great West Securefoundation Balanced or give up 0.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Great West Securefoundation Ba

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) 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.

Great-west Securefoundation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great West Securefoundation Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Great-west Securefoundation 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 Great-west Securefoundation

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

The idea behind Citigroup and Great West Securefoundation Balanced 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.