Correlation Between Citigroup and Sony Group

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

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

Diversification Opportunities for Citigroup and Sony Group

0.73

Correlation Coefficient

Citigroup  Sony Group

Poor diversification

The 3 months correlation between Citigroup and Sony is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Sony Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group 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 Sony Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group Corp has no effect on the direction of Citigroup i.e., Citigroup and Sony Group go up and down completely randomly.

Pair Corralation between Citigroup and Sony Group

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.83 times more return on investment than Sony Group. However, Citigroup is 1.21 times less risky than Sony Group. It trades about 0.27 of its potential returns per unit of risk. Sony Group Corp is currently generating about 0.18 per unit of risk. If you would invest  6,122  in Citigroup on October 25, 2024 and sell it today you would earn a total of  2,047  from holding Citigroup or generate 33.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Citigroup  vs.  Sony Group Corp

Citigroup

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 21 (%) 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.

Sony Group Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Sony Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Sony Group

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

The idea behind Citigroup and Sony Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.