Correlation Between Citigroup and 124857AN3

Can any of the company-specific risk be diversified away by investing in both Citigroup and 124857AN3 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 124857AN3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and CBS P NEW, you can compare the effects of market volatilities on Citigroup and 124857AN3 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 124857AN3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 124857AN3.

Diversification Opportunities for Citigroup and 124857AN3

0.04

Correlation Coefficient

Citigroup  124857AN3

Significant diversification

The 3 months correlation between Citigroup and 124857AN3 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CBS P NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBS P NEW 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 124857AN3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBS P NEW has no effect on the direction of Citigroup i.e., Citigroup and 124857AN3 go up and down completely randomly.

Pair Corralation between Citigroup and 124857AN3

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.66 times more return on investment than 124857AN3. However, Citigroup is 1.66 times more volatile than CBS P NEW. It trades about 0.12 of its potential returns per unit of risk. CBS P NEW is currently generating about 0.09 per unit of risk. If you would invest  6,092  in Citigroup on August 31, 2024 and sell it today you would earn a total of  924.00  from holding Citigroup or generate 15.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.54%
Values	Daily Returns

Citigroup  vs.  CBS P NEW

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 unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

CBS P NEW

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CBS P NEW are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 124857AN3 may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Citigroup and 124857AN3

The main advantage of trading using opposite Citigroup and 124857AN3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 124857AN3 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 124857AN3 will offset losses from the drop in 124857AN3's long position.

The idea behind Citigroup and CBS P NEW 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.