Correlation Between Citigroup and BHCCN

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

By analyzing existing cross correlation between Citigroup and BHCCN 14 15 OCT 30, you can compare the effects of market volatilities on Citigroup and BHCCN 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 BHCCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BHCCN.

Diversification Opportunities for Citigroup and BHCCN

0.74

Correlation Coefficient

Citigroup  BHCCN

Poor diversification

The 3 months correlation between Citigroup and BHCCN is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BHCCN 14 15 OCT 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHCCN 14 15 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 BHCCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHCCN 14 15 has no effect on the direction of Citigroup i.e., Citigroup and BHCCN go up and down completely randomly.

Pair Corralation between Citigroup and BHCCN

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.86 times less return on investment than BHCCN. But when comparing it to its historical volatility, Citigroup is 1.62 times less risky than BHCCN. It trades about 0.05 of its potential returns per unit of risk. BHCCN 14 15 OCT 30 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6,450  in BHCCN 14 15 OCT 30 on September 24, 2024 and sell it today you would earn a total of  1,418  from holding BHCCN 14 15 OCT 30 or generate 21.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	51.81%
Values	Daily Returns

Citigroup  vs.  BHCCN 14 15 OCT 30

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.

BHCCN 14 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHCCN 14 15 OCT 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic indicators remain somewhat 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 BHCCN 14 15 OCT 30 investors.

Pair Trading with Citigroup and BHCCN

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

The idea behind Citigroup and BHCCN 14 15 OCT 30 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.