Correlation Between Citigroup and 303075AA3

Can any of the company-specific risk be diversified away by investing in both Citigroup and 303075AA3 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 303075AA3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and FDS 29 01 MAR 27, you can compare the effects of market volatilities on Citigroup and 303075AA3 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 303075AA3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 303075AA3.

Diversification Opportunities for Citigroup and 303075AA3

0.41

Correlation Coefficient

Citigroup  303075AA3

Very weak diversification

The 3 months correlation between Citigroup and 303075AA3 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and FDS 29 01 MAR 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDS 29 01 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 303075AA3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDS 29 01 has no effect on the direction of Citigroup i.e., Citigroup and 303075AA3 go up and down completely randomly.

Pair Corralation between Citigroup and 303075AA3

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.6 times more return on investment than 303075AA3. However, Citigroup is 4.6 times more volatile than FDS 29 01 MAR 27. It trades about 0.02 of its potential returns per unit of risk. FDS 29 01 MAR 27 is currently generating about -0.1 per unit of risk. If you would invest  7,086  in Citigroup on December 25, 2024 and sell it today you would earn a total of  112.00  from holding Citigroup or generate 1.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	81.36%
Values	Daily Returns

Citigroup  vs.  FDS 29 01 MAR 27

Citigroup

Risk-Adjusted Performance

Insignificant

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

FDS 29 01

Risk-Adjusted Performance

Weak

Over the last 90 days FDS 29 01 MAR 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 303075AA3 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 303075AA3

The main advantage of trading using opposite Citigroup and 303075AA3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 303075AA3 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 303075AA3 will offset losses from the drop in 303075AA3's long position.

The idea behind Citigroup and FDS 29 01 MAR 27 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.