Correlation Between Citigroup and FT Vest

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

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

Diversification Opportunities for Citigroup and FT Vest

0.91

Correlation Coefficient

Citigroup  FT Vest

Almost no diversification

The 3 months correlation between Citigroup and SQMX is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of Citigroup i.e., Citigroup and FT Vest go up and down completely randomly.

Pair Corralation between Citigroup and FT Vest

Taking into account the 90-day investment horizon Citigroup is expected to generate 7.87 times more return on investment than FT Vest. However, Citigroup is 7.87 times more volatile than FT Vest Equity. It trades about 0.04 of its potential returns per unit of risk. FT Vest Equity is currently generating about -0.03 per unit of risk. If you would invest  6,795  in Citigroup on December 19, 2024 and sell it today you would earn a total of  227.00  from holding Citigroup or generate 3.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.61%
Values	Daily Returns

Citigroup  vs.  FT Vest Equity

Citigroup

Risk-Adjusted Performance

Insignificant

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

FT Vest Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days FT Vest Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, FT Vest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and FT Vest

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

The idea behind Citigroup and FT Vest Equity 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.