Correlation Between Citigroup and PureTech Health

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

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

Diversification Opportunities for Citigroup and PureTech Health

-0.65

Correlation Coefficient

Citigroup  PureTech Health

Excellent diversification

The 3 months correlation between Citigroup and PureTech is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health plc 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 PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of Citigroup i.e., Citigroup and PureTech Health go up and down completely randomly.

Pair Corralation between Citigroup and PureTech Health

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the PureTech Health. In addition to that, Citigroup is 1.37 times more volatile than PureTech Health plc. It trades about -0.08 of its total potential returns per unit of risk. PureTech Health plc is currently generating about -0.09 per unit of volatility. If you would invest  14,360  in PureTech Health plc on November 28, 2024 and sell it today you would lose (340.00) from holding PureTech Health plc or give up 2.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  PureTech Health plc

Citigroup

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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 March 2025.

PureTech Health plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days PureTech Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Citigroup and PureTech Health

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

The idea behind Citigroup and PureTech Health plc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.