Correlation Between Citigroup and IENOVA

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

By analyzing existing cross correlation between Citigroup and IENOVA 475 15 JAN 51, you can compare the effects of market volatilities on Citigroup and IENOVA 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 IENOVA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and IENOVA.

Diversification Opportunities for Citigroup and IENOVA

0.15

Correlation Coefficient

Citigroup  IENOVA

Average diversification

The 3 months correlation between Citigroup and IENOVA is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and IENOVA 475 15 JAN 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IENOVA 475 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 IENOVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IENOVA 475 15 has no effect on the direction of Citigroup i.e., Citigroup and IENOVA go up and down completely randomly.

Pair Corralation between Citigroup and IENOVA

Taking into account the 90-day investment horizon Citigroup is expected to generate 5.5 times less return on investment than IENOVA. But when comparing it to its historical volatility, Citigroup is 10.52 times less risky than IENOVA. It trades about 0.23 of its potential returns per unit of risk. IENOVA 475 15 JAN 51 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7,410  in IENOVA 475 15 JAN 51 on September 20, 2024 and sell it today you would earn a total of  215.00  from holding IENOVA 475 15 JAN 51 or generate 2.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	19.05%
Values	Daily Returns

Citigroup  vs.  IENOVA 475 15 JAN 51

Citigroup

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

IENOVA 475 15

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IENOVA 475 15 JAN 51 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IENOVA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and IENOVA

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

The idea behind Citigroup and IENOVA 475 15 JAN 51 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.