Correlation Between Citigroup and Russell High

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

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

Diversification Opportunities for Citigroup and Russell High

0.61

Correlation Coefficient

Citigroup  Russell High

Poor diversification

The 3 months correlation between Citigroup and Russell is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Russell High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Russell High Dividend 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 Russell High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Russell High Dividend has no effect on the direction of Citigroup i.e., Citigroup and Russell High go up and down completely randomly.

Pair Corralation between Citigroup and Russell High

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.04 times more return on investment than Russell High. However, Citigroup is 3.04 times more volatile than Russell High Dividend. It trades about 0.2 of its potential returns per unit of risk. Russell High Dividend is currently generating about 0.04 per unit of risk. If you would invest  5,716  in Citigroup on September 13, 2024 and sell it today you would earn a total of  1,480  from holding Citigroup or generate 25.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  Russell High Dividend

Citigroup

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Russell High Dividend

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Russell High Dividend are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Russell High is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and Russell High

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

The idea behind Citigroup and Russell High Dividend 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.