Correlation Between Citigroup and Tcw Select

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

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

Diversification Opportunities for Citigroup and Tcw Select

-0.35

Correlation Coefficient

Citigroup  Tcw Select

Very good diversification

The 3 months correlation between Citigroup and Tcw is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tcw Select Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tcw Select Equities 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 Tcw Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tcw Select Equities has no effect on the direction of Citigroup i.e., Citigroup and Tcw Select go up and down completely randomly.

Pair Corralation between Citigroup and Tcw Select

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Tcw Select. In addition to that, Citigroup is 1.77 times more volatile than Tcw Select Equities. It trades about -0.2 of its total potential returns per unit of risk. Tcw Select Equities is currently generating about -0.23 per unit of volatility. If you would invest  2,394  in Tcw Select Equities on December 5, 2024 and sell it today you would lose (142.00) from holding Tcw Select Equities or give up 5.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Tcw Select Equities

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) 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.

Tcw Select Equities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tcw Select Equities has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Citigroup and Tcw Select

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

The idea behind Citigroup and Tcw Select Equities 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.