Correlation Between Citigroup and Ultrabear Profund

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

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

Diversification Opportunities for Citigroup and Ultrabear Profund

-0.62

Correlation Coefficient

Citigroup  Ultrabear Profund

Excellent diversification

The 3 months correlation between Citigroup and Ultrabear is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ultrabear Profund Ultrabear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrabear Profund 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 Ultrabear Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrabear Profund has no effect on the direction of Citigroup i.e., Citigroup and Ultrabear Profund go up and down completely randomly.

Pair Corralation between Citigroup and Ultrabear Profund

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.64 times less return on investment than Ultrabear Profund. But when comparing it to its historical volatility, Citigroup is 1.01 times less risky than Ultrabear Profund. It trades about 0.04 of its potential returns per unit of risk. Ultrabear Profund Ultrabear is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  978.00  in Ultrabear Profund Ultrabear on December 21, 2024 and sell it today you would earn a total of  115.00  from holding Ultrabear Profund Ultrabear or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Citigroup  vs.  Ultrabear Profund Ultrabear

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) 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.

Ultrabear Profund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrabear Profund Ultrabear are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ultrabear Profund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Ultrabear Profund

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

The idea behind Citigroup and Ultrabear Profund Ultrabear 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.