Correlation Between Citigroup and 180 Degree

Can any of the company-specific risk be diversified away by investing in both Citigroup and 180 Degree 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 180 Degree into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and 180 Degree Capital, you can compare the effects of market volatilities on Citigroup and 180 Degree 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 180 Degree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 180 Degree.

Diversification Opportunities for Citigroup and 180 Degree

0.61

Correlation Coefficient

Citigroup  180 Degree

Poor diversification

The 3 months correlation between Citigroup and 180 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and 180 Degree Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 180 Degree Capital 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 180 Degree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 180 Degree Capital has no effect on the direction of Citigroup i.e., Citigroup and 180 Degree go up and down completely randomly.

Pair Corralation between Citigroup and 180 Degree

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.01 times more return on investment than 180 Degree. However, Citigroup is 1.01 times more volatile than 180 Degree Capital. It trades about 0.16 of its potential returns per unit of risk. 180 Degree Capital is currently generating about 0.11 per unit of risk. If you would invest  5,877  in Citigroup on September 17, 2024 and sell it today you would earn a total of  1,224  from holding Citigroup or generate 20.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Citigroup  vs.  180 Degree Capital

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) 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.

180 Degree Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 180 Degree Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, 180 Degree displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and 180 Degree

The main advantage of trading using opposite Citigroup and 180 Degree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 180 Degree 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 180 Degree will offset losses from the drop in 180 Degree's long position.

The idea behind Citigroup and 180 Degree Capital 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.