Correlation Between Citigroup and SVOA Public

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

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

Diversification Opportunities for Citigroup and SVOA Public

-0.56

Correlation Coefficient

Citigroup  SVOA Public

Excellent diversification

The 3 months correlation between Citigroup and SVOA is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SVOA Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVOA Public 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 SVOA Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVOA Public has no effect on the direction of Citigroup i.e., Citigroup and SVOA Public go up and down completely randomly.

Pair Corralation between Citigroup and SVOA Public

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.25 times more return on investment than SVOA Public. However, Citigroup is 1.25 times more volatile than SVOA Public. It trades about 0.41 of its potential returns per unit of risk. SVOA Public is currently generating about -0.29 per unit of risk. If you would invest  6,977  in Citigroup on October 24, 2024 and sell it today you would earn a total of  1,022  from holding Citigroup or generate 14.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Citigroup  vs.  SVOA Public

Citigroup

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) 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.

SVOA Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVOA Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Citigroup and SVOA Public

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

The idea behind Citigroup and SVOA Public 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.