Correlation Between Citigroup and CHURCH

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

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

Diversification Opportunities for Citigroup and CHURCH

0.2

Correlation Coefficient

Citigroup  CHURCH

Modest diversification

The 3 months correlation between Citigroup and CHURCH is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CHURCH DWIGHT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHURCH DWIGHT INC 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 CHURCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHURCH DWIGHT INC has no effect on the direction of Citigroup i.e., Citigroup and CHURCH go up and down completely randomly.

Pair Corralation between Citigroup and CHURCH

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.13 times less return on investment than CHURCH. But when comparing it to its historical volatility, Citigroup is 1.09 times less risky than CHURCH. It trades about 0.07 of its potential returns per unit of risk. CHURCH DWIGHT INC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,855  in CHURCH DWIGHT INC on October 12, 2024 and sell it today you would earn a total of  80.00  from holding CHURCH DWIGHT INC or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

Citigroup  vs.  CHURCH DWIGHT INC

Citigroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

CHURCH DWIGHT INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHURCH DWIGHT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CHURCH DWIGHT INC investors.

Pair Trading with Citigroup and CHURCH

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

The idea behind Citigroup and CHURCH DWIGHT INC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.