Correlation Between Citigroup and Swatch

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

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

Diversification Opportunities for Citigroup and Swatch

-0.55

Correlation Coefficient

Citigroup  Swatch

Excellent diversification

The 3 months correlation between Citigroup and Swatch is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and The Swatch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group 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 Swatch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group has no effect on the direction of Citigroup i.e., Citigroup and Swatch go up and down completely randomly.

Pair Corralation between Citigroup and Swatch

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Swatch. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 2.52 times less risky than Swatch. The stock trades about -0.03 of its potential returns per unit of risk. The The Swatch Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  820.00  in The Swatch Group on September 23, 2024 and sell it today you would lose (5.00) from holding The Swatch Group or give up 0.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  The Swatch Group

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.

Swatch Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Swatch Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Swatch may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Citigroup and Swatch

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

The idea behind Citigroup and The Swatch Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..