Correlation Between Citigroup and Real Estate

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

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

Diversification Opportunities for Citigroup and Real Estate

0.45

Correlation Coefficient

Citigroup  Real Estate

Very weak 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 Estate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Fund 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 Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Fund has no effect on the direction of Citigroup i.e., Citigroup and Real Estate go up and down completely randomly.

Pair Corralation between Citigroup and Real Estate

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.82 times more return on investment than Real Estate. However, Citigroup is 1.82 times more volatile than Real Estate Fund. It trades about 0.05 of its potential returns per unit of risk. Real Estate Fund is currently generating about 0.06 per unit of risk. If you would invest  6,795  in Citigroup on December 19, 2024 and sell it today you would earn a total of  349.00  from holding Citigroup or generate 5.14% return on investment over 90 days.

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

Citigroup  vs.  Real Estate Fund

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Real Estate Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Real Estate Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Real Estate 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 Real Estate

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

The idea behind Citigroup and Real Estate Fund 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.