Correlation Between Citigroup and Rydex Inverse

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

By analyzing existing cross correlation between Citigroup and Rydex Inverse Nasdaq 100, you can compare the effects of market volatilities on Citigroup and Rydex Inverse 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 Rydex Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Rydex Inverse.

Diversification Opportunities for Citigroup and Rydex Inverse

-0.87

Correlation Coefficient

Citigroup  Rydex Inverse

Pay attention - limited upside

The 3 months correlation between Citigroup and Rydex is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Rydex Inverse Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rydex Inverse Nasdaq 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 Rydex Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rydex Inverse Nasdaq has no effect on the direction of Citigroup i.e., Citigroup and Rydex Inverse go up and down completely randomly.

Pair Corralation between Citigroup and Rydex Inverse

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.31 times less return on investment than Rydex Inverse. But when comparing it to its historical volatility, Citigroup is 1.61 times less risky than Rydex Inverse. It trades about 0.07 of its potential returns per unit of risk. Rydex Inverse Nasdaq 100 is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  963.00  in Rydex Inverse Nasdaq 100 on October 16, 2024 and sell it today you would earn a total of  123.00  from holding Rydex Inverse Nasdaq 100 or generate 12.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Rydex Inverse Nasdaq 100

Citigroup

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Rydex Inverse Nasdaq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rydex Inverse Nasdaq 100 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Rydex Inverse 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 Rydex Inverse

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

The idea behind Citigroup and Rydex Inverse Nasdaq 100 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.