Correlation Between Citigroup and PT Boston

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

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

Diversification Opportunities for Citigroup and PT Boston

-0.71

Correlation Coefficient

Citigroup  PT Boston

Pay attention - limited upside

The 3 months correlation between Citigroup and SOFA is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PT Boston Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Boston Furniture 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 PT Boston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Boston Furniture has no effect on the direction of Citigroup i.e., Citigroup and PT Boston go up and down completely randomly.

Pair Corralation between Citigroup and PT Boston

Taking into account the 90-day investment horizon Citigroup is expected to generate 12.42 times less return on investment than PT Boston. But when comparing it to its historical volatility, Citigroup is 2.97 times less risky than PT Boston. It trades about 0.03 of its potential returns per unit of risk. PT Boston Furniture is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,600  in PT Boston Furniture on December 29, 2024 and sell it today you would earn a total of  2,100  from holding PT Boston Furniture or generate 45.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Citigroup  vs.  PT Boston Furniture

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 2 (%) 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.

PT Boston Furniture

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Boston Furniture are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Boston disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and PT Boston

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

The idea behind Citigroup and PT Boston Furniture 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.