Correlation Between Citigroup and Purpose High

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

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

Diversification Opportunities for Citigroup and Purpose High

0.28

Correlation Coefficient

Citigroup  Purpose High

Modest diversification

The 3 months correlation between Citigroup and Purpose is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Purpose High Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Purpose High Interest 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 Purpose High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Purpose High Interest has no effect on the direction of Citigroup i.e., Citigroup and Purpose High go up and down completely randomly.

Pair Corralation between Citigroup and Purpose High

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Purpose High. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.17 times less risky than Purpose High. The stock trades about -0.09 of its potential returns per unit of risk. The Purpose High Interest is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4,713  in Purpose High Interest on September 24, 2024 and sell it today you would earn a total of  299.00  from holding Purpose High Interest or generate 6.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Purpose High Interest

Citigroup

Risk-Adjusted Performance

9 of 100

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Purpose High Interest

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose High Interest are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Purpose High is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Purpose High

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

The idea behind Citigroup and Purpose High Interest 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..