Correlation Between Citigroup and SilverBox Corp

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

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

Diversification Opportunities for Citigroup and SilverBox Corp

-0.1

Correlation Coefficient

Citigroup  SilverBox Corp

Good diversification

The 3 months correlation between Citigroup and SilverBox is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SilverBox Corp IV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverBox Corp IV 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 SilverBox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverBox Corp IV has no effect on the direction of Citigroup i.e., Citigroup and SilverBox Corp go up and down completely randomly.

Pair Corralation between Citigroup and SilverBox Corp

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.91 times more return on investment than SilverBox Corp. However, Citigroup is 1.1 times less risky than SilverBox Corp. It trades about 0.14 of its potential returns per unit of risk. SilverBox Corp IV is currently generating about -0.12 per unit of risk. If you would invest  3,675  in Citigroup on September 19, 2024 and sell it today you would earn a total of  3,137  from holding Citigroup or generate 85.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	18.28%
Values	Daily Returns

Citigroup  vs.  SilverBox Corp IV

Citigroup

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 6 (%) 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.

SilverBox Corp IV

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SilverBox Corp IV are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SilverBox Corp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and SilverBox Corp

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

The idea behind Citigroup and SilverBox Corp IV 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.