Correlation Between Citigroup and Smead Funds

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

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

Diversification Opportunities for Citigroup and Smead Funds

-0.29

Correlation Coefficient

Citigroup  Smead Funds

Very good diversification

The 3 months correlation between Citigroup and Smead is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Smead Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead Funds Trust 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 Smead Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead Funds Trust has no effect on the direction of Citigroup i.e., Citigroup and Smead Funds go up and down completely randomly.

Pair Corralation between Citigroup and Smead Funds

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.96 times more return on investment than Smead Funds. However, Citigroup is 1.96 times more volatile than Smead Funds Trust. It trades about 0.14 of its potential returns per unit of risk. Smead Funds Trust is currently generating about -0.04 per unit of risk. If you would invest  6,042  in Citigroup on September 4, 2024 and sell it today you would earn a total of  1,097  from holding Citigroup or generate 18.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  Smead Funds Trust

Citigroup

Risk-Adjusted Performance

11 of 100

Good

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.

Smead Funds Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smead Funds Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Smead Funds 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 Smead Funds

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

The idea behind Citigroup and Smead Funds Trust 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.