Correlation Between Citigroup and SpareBank

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

By analyzing existing cross correlation between Citigroup and SpareBank 1 SR Bank, you can compare the effects of market volatilities on Citigroup and SpareBank 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 SpareBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and SpareBank.

Diversification Opportunities for Citigroup and SpareBank

0.0

Correlation Coefficient

Citigroup  SpareBank

Pay attention - limited upside

The 3 months correlation between Citigroup and SpareBank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SpareBank 1 SR Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpareBank 1 SR 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 SpareBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpareBank 1 SR has no effect on the direction of Citigroup i.e., Citigroup and SpareBank go up and down completely randomly.

Pair Corralation between Citigroup and SpareBank

If you would invest  6,129  in Citigroup on September 21, 2024 and sell it today you would earn a total of  713.00  from holding Citigroup or generate 11.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  SpareBank 1 SR Bank

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) 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 January 2025.

SpareBank 1 SR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SpareBank 1 SR Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, SpareBank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and SpareBank

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

The idea behind Citigroup and SpareBank 1 SR Bank 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.