Correlation Between Citigroup and Suzuki

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

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

Diversification Opportunities for Citigroup and Suzuki

0.33

Correlation Coefficient

Citigroup  Suzuki

Weak diversification

The 3 months correlation between Citigroup and Suzuki is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Suzuki Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzuki Motor 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 Suzuki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzuki Motor has no effect on the direction of Citigroup i.e., Citigroup and Suzuki go up and down completely randomly.

Pair Corralation between Citigroup and Suzuki

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.36 times more return on investment than Suzuki. However, Citigroup is 2.74 times less risky than Suzuki. It trades about 0.24 of its potential returns per unit of risk. Suzuki Motor is currently generating about 0.03 per unit of risk. If you would invest  6,129  in Citigroup on October 20, 2024 and sell it today you would earn a total of  1,870  from holding Citigroup or generate 30.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Citigroup  vs.  Suzuki Motor

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

Suzuki Motor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Suzuki Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Suzuki may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Citigroup and Suzuki

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

The idea behind Citigroup and Suzuki Motor 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.