Correlation Between Citigroup and Sekisui House

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

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

Diversification Opportunities for Citigroup and Sekisui House

-0.61

Correlation Coefficient

Citigroup  Sekisui House

Excellent diversification

The 3 months correlation between Citigroup and Sekisui is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Sekisui House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui House 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 Sekisui House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui House has no effect on the direction of Citigroup i.e., Citigroup and Sekisui House go up and down completely randomly.

Pair Corralation between Citigroup and Sekisui House

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.98 times more return on investment than Sekisui House. However, Citigroup is 1.02 times less risky than Sekisui House. It trades about 0.07 of its potential returns per unit of risk. Sekisui House is currently generating about 0.04 per unit of risk. If you would invest  4,219  in Citigroup on September 24, 2024 and sell it today you would earn a total of  2,700  from holding Citigroup or generate 64.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.42%
Values	Daily Returns

Citigroup  vs.  Sekisui House

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sekisui House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sekisui House has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Citigroup and Sekisui House

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

The idea behind Citigroup and Sekisui House 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.