Correlation Between Citigroup and Oak View

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

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

Diversification Opportunities for Citigroup and Oak View

0.72

Correlation Coefficient

Citigroup  Oak View

Poor diversification

The 3 months correlation between Citigroup and Oak is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Oak View National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oak View National 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 Oak View. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oak View National has no effect on the direction of Citigroup i.e., Citigroup and Oak View go up and down completely randomly.

Pair Corralation between Citigroup and Oak View

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.54 times more return on investment than Oak View. However, Citigroup is 4.54 times more volatile than Oak View National. It trades about 0.41 of its potential returns per unit of risk. Oak View National is currently generating about 0.03 per unit of risk. If you would invest  6,977  in Citigroup on October 23, 2024 and sell it today you would earn a total of  1,022  from holding Citigroup or generate 14.65% return on investment over 90 days.

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

Citigroup  vs.  Oak View National

Citigroup

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) 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.

Oak View National

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oak View National are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Oak View may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citigroup and Oak View

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

The idea behind Citigroup and Oak View National 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.