Correlation Between Citigroup and OShares Quality

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

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

Diversification Opportunities for Citigroup and OShares Quality

0.66

Correlation Coefficient

Citigroup  OShares Quality

Poor diversification

The 3 months correlation between Citigroup and OShares is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and OShares Quality Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OShares Quality Dividend 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 OShares Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OShares Quality Dividend has no effect on the direction of Citigroup i.e., Citigroup and OShares Quality go up and down completely randomly.

Pair Corralation between Citigroup and OShares Quality

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.13 times more return on investment than OShares Quality. However, Citigroup is 2.13 times more volatile than OShares Quality Dividend. It trades about 0.02 of its potential returns per unit of risk. OShares Quality Dividend is currently generating about -0.22 per unit of risk. If you would invest  7,075  in Citigroup on September 26, 2024 and sell it today you would earn a total of  25.00  from holding Citigroup or generate 0.35% return on investment over 90 days.

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

Citigroup  vs.  OShares Quality Dividend

Citigroup

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

OShares Quality Dividend

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OShares Quality Dividend are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, OShares Quality is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and OShares Quality

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

The idea behind Citigroup and OShares Quality Dividend 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.