Correlation Between Citigroup and Real Good

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

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

Diversification Opportunities for Citigroup and Real Good

-0.45

Correlation Coefficient

Citigroup  Real Good

Very good diversification

The 3 months correlation between Citigroup and Real is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Real Good Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Good Food 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 Real Good. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Good Food has no effect on the direction of Citigroup i.e., Citigroup and Real Good go up and down completely randomly.

Pair Corralation between Citigroup and Real Good

Taking into account the 90-day investment horizon Citigroup is expected to generate 264.07 times less return on investment than Real Good. But when comparing it to its historical volatility, Citigroup is 75.81 times less risky than Real Good. It trades about 0.04 of its potential returns per unit of risk. Real Good Food is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  294.00  in Real Good Food on December 26, 2024 and sell it today you would lose (280.00) from holding Real Good Food or give up 95.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	22.95%
Values	Daily Returns

Citigroup  vs.  Real Good Food

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) 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.

Real Good Food

Risk-Adjusted Performance

OK

Over the last 90 days Real Good Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak technical and fundamental indicators, Real Good reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Real Good

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

The idea behind Citigroup and Real Good Food 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.