Correlation Between Citigroup and SSIC Old

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

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

Diversification Opportunities for Citigroup and SSIC Old

0.89

Correlation Coefficient

Citigroup  SSIC Old

Very poor diversification

The 3 months correlation between Citigroup and SSIC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SSIC Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSIC Old 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 SSIC Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSIC Old has no effect on the direction of Citigroup i.e., Citigroup and SSIC Old go up and down completely randomly.

Pair Corralation between Citigroup and SSIC Old

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.4 times more return on investment than SSIC Old. However, Citigroup is 1.4 times more volatile than SSIC Old. It trades about 0.07 of its potential returns per unit of risk. SSIC Old is currently generating about 0.08 per unit of risk. If you would invest  6,334  in Citigroup on October 10, 2024 and sell it today you would earn a total of  1,034  from holding Citigroup or generate 16.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	82.26%
Values	Daily Returns

Citigroup  vs.  SSIC Old

Citigroup

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 11 (%) 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.

SSIC Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSIC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, SSIC Old is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and SSIC Old

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

The idea behind Citigroup and SSIC Old 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.