Correlation Between Citigroup and SIKA AG

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

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

Diversification Opportunities for Citigroup and SIKA AG

0.58

Correlation Coefficient

Citigroup  SIKA AG

Very weak diversification

The 3 months correlation between Citigroup and SIKA is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SIKA AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIKA AG UNSPADR 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 SIKA AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIKA AG UNSPADR has no effect on the direction of Citigroup i.e., Citigroup and SIKA AG go up and down completely randomly.

Pair Corralation between Citigroup and SIKA AG

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.92 times less return on investment than SIKA AG. But when comparing it to its historical volatility, Citigroup is 1.49 times less risky than SIKA AG. It trades about 0.01 of its potential returns per unit of risk. SIKA AG UNSPADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,240  in SIKA AG UNSPADR on December 28, 2024 and sell it today you would earn a total of  60.00  from holding SIKA AG UNSPADR or generate 2.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Citigroup  vs.  SIKA AG UNSPADR

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

SIKA AG UNSPADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIKA AG UNSPADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, SIKA AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and SIKA AG

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

The idea behind Citigroup and SIKA AG UNSPADR 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.