Correlation Between Citigroup and ONE Enterprise

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

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

Diversification Opportunities for Citigroup and ONE Enterprise

-0.27

Correlation Coefficient

Citigroup  ONE Enterprise

Very good diversification

The 3 months correlation between Citigroup and ONE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and The ONE Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONE Enterprise 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 ONE Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONE Enterprise has no effect on the direction of Citigroup i.e., Citigroup and ONE Enterprise go up and down completely randomly.

Pair Corralation between Citigroup and ONE Enterprise

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.8 times more return on investment than ONE Enterprise. However, Citigroup is 1.25 times less risky than ONE Enterprise. It trades about 0.05 of its potential returns per unit of risk. The ONE Enterprise is currently generating about -0.34 per unit of risk. If you would invest  6,795  in Citigroup on December 19, 2024 and sell it today you would earn a total of  349.00  from holding Citigroup or generate 5.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Citigroup  vs.  The ONE Enterprise

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ONE Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days The ONE Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Citigroup and ONE Enterprise

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

The idea behind Citigroup and The ONE Enterprise 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.