Correlation Between Citigroup and Seed Innovations

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

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

Diversification Opportunities for Citigroup and Seed Innovations

0.02

Correlation Coefficient

Citigroup  Seed Innovations

Significant diversification

The 3 months correlation between Citigroup and Seed is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Seed Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seed Innovations 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 Seed Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seed Innovations has no effect on the direction of Citigroup i.e., Citigroup and Seed Innovations go up and down completely randomly.

Pair Corralation between Citigroup and Seed Innovations

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.9 times less return on investment than Seed Innovations. In addition to that, Citigroup is 1.04 times more volatile than Seed Innovations. It trades about 0.04 of its total potential returns per unit of risk. Seed Innovations is currently generating about 0.13 per unit of volatility. If you would invest  160.00  in Seed Innovations on October 11, 2024 and sell it today you would earn a total of  5.00  from holding Seed Innovations or generate 3.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Citigroup  vs.  Seed Innovations

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.

Seed Innovations

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seed Innovations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Seed Innovations is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and Seed Innovations

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

The idea behind Citigroup and Seed Innovations 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..