Correlation Between Citigroup and DELHAIZE

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

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

Diversification Opportunities for Citigroup and DELHAIZE

-0.56

Correlation Coefficient

Citigroup  DELHAIZE

Excellent diversification

The 3 months correlation between Citigroup and DELHAIZE is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and DELHAIZE GROUP SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DELHAIZE GROUP SA 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 DELHAIZE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DELHAIZE GROUP SA has no effect on the direction of Citigroup i.e., Citigroup and DELHAIZE go up and down completely randomly.

Pair Corralation between Citigroup and DELHAIZE

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.27 times more return on investment than DELHAIZE. However, Citigroup is 2.27 times more volatile than DELHAIZE GROUP SA. It trades about 0.01 of its potential returns per unit of risk. DELHAIZE GROUP SA is currently generating about 0.03 per unit of risk. If you would invest  6,991  in Citigroup on December 29, 2024 and sell it today you would earn a total of  42.00  from holding Citigroup or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	52.46%
Values	Daily Returns

Citigroup  vs.  DELHAIZE GROUP SA

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

DELHAIZE GROUP SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DELHAIZE GROUP SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DELHAIZE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and DELHAIZE

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

The idea behind Citigroup and DELHAIZE GROUP SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.