Correlation Between Citigroup and Phoenix Mills

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

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

Diversification Opportunities for Citigroup and Phoenix Mills

-0.05

Correlation Coefficient

Citigroup  Phoenix Mills

Good diversification

The 3 months correlation between Citigroup and Phoenix is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and The Phoenix Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Mills 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 Phoenix Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Mills has no effect on the direction of Citigroup i.e., Citigroup and Phoenix Mills go up and down completely randomly.

Pair Corralation between Citigroup and Phoenix Mills

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.07 times less return on investment than Phoenix Mills. But when comparing it to its historical volatility, Citigroup is 4.75 times less risky than Phoenix Mills. It trades about 0.12 of its potential returns per unit of risk. The Phoenix Mills is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  114,411  in The Phoenix Mills on September 15, 2024 and sell it today you would earn a total of  63,119  from holding The Phoenix Mills or generate 55.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.14%
Values	Daily Returns

Citigroup  vs.  The Phoenix Mills

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Phoenix Mills

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Phoenix Mills are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Phoenix Mills is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Phoenix Mills

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

The idea behind Citigroup and The Phoenix Mills 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.