Correlation Between Citigroup and Annaly Capital

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

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

Diversification Opportunities for Citigroup and Annaly Capital

-0.04

Correlation Coefficient

Citigroup  Annaly Capital

Good diversification

The 3 months correlation between Citigroup and Annaly is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Annaly Capital Management, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Manag 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 Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Manag has no effect on the direction of Citigroup i.e., Citigroup and Annaly Capital go up and down completely randomly.

Pair Corralation between Citigroup and Annaly Capital

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.87 times less return on investment than Annaly Capital. In addition to that, Citigroup is 1.46 times more volatile than Annaly Capital Management,. It trades about 0.04 of its total potential returns per unit of risk. Annaly Capital Management, is currently generating about 0.11 per unit of volatility. If you would invest  11,444  in Annaly Capital Management, on December 23, 2024 and sell it today you would earn a total of  988.00  from holding Annaly Capital Management, or generate 8.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Citigroup  vs.  Annaly Capital Management,

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.

Annaly Capital Manag

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Annaly Capital Management, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Annaly Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and Annaly Capital

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

The idea behind Citigroup and Annaly Capital Management, 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.