Correlation Between Citigroup and Bank Ozk

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

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

Diversification Opportunities for Citigroup and Bank Ozk

0.91

Correlation Coefficient

Citigroup  Bank Ozk

Almost no diversification

The 3 months correlation between Citigroup and Bank is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Bank Ozk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Ozk 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 Bank Ozk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Ozk has no effect on the direction of Citigroup i.e., Citigroup and Bank Ozk go up and down completely randomly.

Pair Corralation between Citigroup and Bank Ozk

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.94 times more return on investment than Bank Ozk. However, Citigroup is 1.07 times less risky than Bank Ozk. It trades about 0.04 of its potential returns per unit of risk. Bank Ozk is currently generating about 0.03 per unit of risk. If you would invest  7,051  in Citigroup on December 27, 2024 and sell it today you would earn a total of  273.00  from holding Citigroup or generate 3.87% return on investment over 90 days.

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

Citigroup  vs.  Bank Ozk

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bank Ozk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Ozk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Bank Ozk is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and Bank Ozk

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

The idea behind Citigroup and Bank Ozk 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.