Correlation Between Citigroup and United Royale

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

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

Diversification Opportunities for Citigroup and United Royale

0.0

Correlation Coefficient

Citigroup  United Royale

Pay attention - limited upside

The 3 months correlation between Citigroup and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and United Royale Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Royale Holdings 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 United Royale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Royale Holdings has no effect on the direction of Citigroup i.e., Citigroup and United Royale go up and down completely randomly.

Pair Corralation between Citigroup and United Royale

If you would invest  6,350  in Citigroup on September 30, 2024 and sell it today you would earn a total of  750.00  from holding Citigroup or generate 11.81% return on investment over 90 days.

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

Citigroup  vs.  United Royale Holdings

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

United Royale Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Royale Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, United Royale is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and United Royale

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

The idea behind Citigroup and United Royale Holdings 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.