Correlation Between Citigroup and Sports Entertainment

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

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

Diversification Opportunities for Citigroup and Sports Entertainment

-0.68

Correlation Coefficient

Citigroup  Sports Entertainment

Excellent diversification

The 3 months correlation between Citigroup and Sports is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Sports Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sports Entertainment 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 Sports Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sports Entertainment has no effect on the direction of Citigroup i.e., Citigroup and Sports Entertainment go up and down completely randomly.

Pair Corralation between Citigroup and Sports Entertainment

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.3 times more return on investment than Sports Entertainment. However, Citigroup is 3.3 times less risky than Sports Entertainment. It trades about 0.09 of its potential returns per unit of risk. Sports Entertainment Group is currently generating about 0.03 per unit of risk. If you would invest  4,297  in Citigroup on September 30, 2024 and sell it today you would earn a total of  2,803  from holding Citigroup or generate 65.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Citigroup  vs.  Sports Entertainment Group

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Sports Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sports Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Citigroup and Sports Entertainment

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

The idea behind Citigroup and Sports Entertainment Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.