Correlation Between Citigroup and ONTX Old

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

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

Diversification Opportunities for Citigroup and ONTX Old

-0.16

Correlation Coefficient

Citigroup  ONTX Old

Good diversification

The 3 months correlation between Citigroup and ONTX is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ONTX Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONTX Old 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 ONTX Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONTX Old has no effect on the direction of Citigroup i.e., Citigroup and ONTX Old go up and down completely randomly.

Pair Corralation between Citigroup and ONTX Old

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.33 times less return on investment than ONTX Old. But when comparing it to its historical volatility, Citigroup is 4.45 times less risky than ONTX Old. It trades about 0.07 of its potential returns per unit of risk. ONTX Old is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  87.00  in ONTX Old on October 10, 2024 and sell it today you would earn a total of  15.00  from holding ONTX Old or generate 17.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	22.62%
Values	Daily Returns

Citigroup  vs.  ONTX Old

Citigroup

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

ONTX Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ONTX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ONTX Old 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 ONTX Old

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

The idea behind Citigroup and ONTX Old 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.