Correlation Between Citigroup and Professional Waste

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

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

Diversification Opportunities for Citigroup and Professional Waste

-0.26

Correlation Coefficient

Citigroup  Professional Waste

Very good diversification

The 3 months correlation between Citigroup and Professional is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Professional Waste Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Professional Waste 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 Professional Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Professional Waste has no effect on the direction of Citigroup i.e., Citigroup and Professional Waste go up and down completely randomly.

Pair Corralation between Citigroup and Professional Waste

Taking into account the 90-day investment horizon Citigroup is expected to generate 60.78 times less return on investment than Professional Waste. But when comparing it to its historical volatility, Citigroup is 48.81 times less risky than Professional Waste. It trades about 0.06 of its potential returns per unit of risk. Professional Waste Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Professional Waste Technology on October 12, 2024 and sell it today you would lose (27.00) from holding Professional Waste Technology or give up 77.14% of portfolio value over 90 days.

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

Citigroup  vs.  Professional Waste Technology

Citigroup

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 6 (%) 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 February 2025.

Professional Waste

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Professional Waste Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Professional Waste disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Professional Waste

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

The idea behind Citigroup and Professional Waste Technology 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.