Correlation Between Citigroup and Proximus

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

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

Diversification Opportunities for Citigroup and Proximus

-0.52

Correlation Coefficient

Citigroup  Proximus

Excellent diversification

The 3 months correlation between Citigroup and Proximus is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Proximus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proximus NV 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 Proximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proximus NV has no effect on the direction of Citigroup i.e., Citigroup and Proximus go up and down completely randomly.

Pair Corralation between Citigroup and Proximus

Taking into account the 90-day investment horizon Citigroup is expected to generate 17.06 times less return on investment than Proximus. In addition to that, Citigroup is 1.13 times more volatile than Proximus NV. It trades about 0.01 of its total potential returns per unit of risk. Proximus NV is currently generating about 0.28 per unit of volatility. If you would invest  499.00  in Proximus NV on December 30, 2024 and sell it today you would earn a total of  185.00  from holding Proximus NV or generate 37.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Citigroup  vs.  Proximus NV

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) 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.

Proximus NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Proximus NV are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Proximus reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Proximus

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

The idea behind Citigroup and Proximus NV 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.