Correlation Between Citigroup and Skydeck Acquisition

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

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

Diversification Opportunities for Citigroup and Skydeck Acquisition

-0.26

Correlation Coefficient

Citigroup  Skydeck Acquisition

Very good diversification

The 3 months correlation between Citigroup and Skydeck is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Skydeck Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skydeck Acquisition Corp 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 Skydeck Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skydeck Acquisition Corp has no effect on the direction of Citigroup i.e., Citigroup and Skydeck Acquisition go up and down completely randomly.

Pair Corralation between Citigroup and Skydeck Acquisition

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.48 times more return on investment than Skydeck Acquisition. However, Citigroup is 4.48 times more volatile than Skydeck Acquisition Corp. It trades about 0.07 of its potential returns per unit of risk. Skydeck Acquisition Corp is currently generating about 0.02 per unit of risk. If you would invest  4,168  in Citigroup on September 20, 2024 and sell it today you would earn a total of  2,734  from holding Citigroup or generate 65.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	19.76%
Values	Daily Returns

Citigroup  vs.  Skydeck Acquisition Corp

Citigroup

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Skydeck Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skydeck Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Skydeck Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and Skydeck Acquisition

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

The idea behind Citigroup and Skydeck Acquisition Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.