Correlation Between Citigroup and Palm Valley

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

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

Diversification Opportunities for Citigroup and Palm Valley

0.38

Correlation Coefficient

Citigroup  Palm Valley

Weak diversification

The 3 months correlation between Citigroup and Palm is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Palm Valley Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palm Valley Capital 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 Palm Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palm Valley Capital has no effect on the direction of Citigroup i.e., Citigroup and Palm Valley go up and down completely randomly.

Pair Corralation between Citigroup and Palm Valley

Taking into account the 90-day investment horizon Citigroup is expected to generate 11.09 times more return on investment than Palm Valley. However, Citigroup is 11.09 times more volatile than Palm Valley Capital. It trades about 0.01 of its potential returns per unit of risk. Palm Valley Capital is currently generating about 0.1 per unit of risk. If you would invest  6,991  in Citigroup on December 28, 2024 and sell it today you would earn a total of  42.00  from holding Citigroup or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Palm Valley Capital

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.

Palm Valley Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Palm Valley Capital are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Palm Valley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Palm Valley

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

The idea behind Citigroup and Palm Valley Capital 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.