Correlation Between Citigroup and Riverfront Dynamic

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

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

Diversification Opportunities for Citigroup and Riverfront Dynamic

0.21

Correlation Coefficient

Citigroup  Riverfront Dynamic

Modest diversification

The 3 months correlation between Citigroup and Riverfront is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Riverfront Dynamic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverfront Dynamic Equity 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 Riverfront Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverfront Dynamic Equity has no effect on the direction of Citigroup i.e., Citigroup and Riverfront Dynamic go up and down completely randomly.

Pair Corralation between Citigroup and Riverfront Dynamic

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.06 times more return on investment than Riverfront Dynamic. However, Citigroup is 3.06 times more volatile than Riverfront Dynamic Equity. It trades about 0.09 of its potential returns per unit of risk. Riverfront Dynamic Equity is currently generating about 0.08 per unit of risk. If you would invest  5,700  in Citigroup on October 12, 2024 and sell it today you would earn a total of  1,626  from holding Citigroup or generate 28.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.47%
Values	Daily Returns

Citigroup  vs.  Riverfront Dynamic Equity

Citigroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Riverfront Dynamic Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riverfront Dynamic Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Riverfront Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Riverfront Dynamic

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

The idea behind Citigroup and Riverfront Dynamic Equity 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.