Correlation Between Citigroup and Tango Therapeutics

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

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

Diversification Opportunities for Citigroup and Tango Therapeutics

-0.91

Correlation Coefficient

Citigroup  Tango Therapeutics

Pay attention - limited upside

The 3 months correlation between Citigroup and Tango is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tango Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tango Therapeutics 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 Tango Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tango Therapeutics has no effect on the direction of Citigroup i.e., Citigroup and Tango Therapeutics go up and down completely randomly.

Pair Corralation between Citigroup and Tango Therapeutics

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.27 times more return on investment than Tango Therapeutics. However, Citigroup is 3.64 times less risky than Tango Therapeutics. It trades about -0.03 of its potential returns per unit of risk. Tango Therapeutics is currently generating about -0.23 per unit of risk. If you would invest  6,984  in Citigroup on September 23, 2024 and sell it today you would lose (65.00) from holding Citigroup or give up 0.93% of portfolio value over 90 days.

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

Citigroup  vs.  Tango Therapeutics

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tango Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tango Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citigroup and Tango Therapeutics

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

The idea behind Citigroup and Tango Therapeutics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.