Correlation Between Citigroup and Smart For

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

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

Diversification Opportunities for Citigroup and Smart For

-0.86

Correlation Coefficient

Citigroup  Smart For

Pay attention - limited upside

The 3 months correlation between Citigroup and Smart is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Smart for Life, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart for Life, 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 Smart For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart for Life, has no effect on the direction of Citigroup i.e., Citigroup and Smart For go up and down completely randomly.

Pair Corralation between Citigroup and Smart For

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.11 times more return on investment than Smart For. However, Citigroup is 9.23 times less risky than Smart For. It trades about 0.1 of its potential returns per unit of risk. Smart for Life, is currently generating about -0.22 per unit of risk. If you would invest  5,825  in Citigroup on September 12, 2024 and sell it today you would earn a total of  1,425  from holding Citigroup or generate 24.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	58.87%
Values	Daily Returns

Citigroup  vs.  Smart for Life,

Citigroup

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 16 (%) 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.

Smart for Life,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart for Life, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Citigroup and Smart For

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

The idea behind Citigroup and Smart for Life, 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.