Correlation Between Citigroup and 456837AW3

Can any of the company-specific risk be diversified away by investing in both Citigroup and 456837AW3 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 456837AW3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and ING GROEP NV, you can compare the effects of market volatilities on Citigroup and 456837AW3 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 456837AW3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 456837AW3.

Diversification Opportunities for Citigroup and 456837AW3

-0.68

Correlation Coefficient

Citigroup  456837AW3

Excellent diversification

The 3 months correlation between Citigroup and 456837AW3 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and ING GROEP NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING GROEP NV 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 456837AW3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING GROEP NV has no effect on the direction of Citigroup i.e., Citigroup and 456837AW3 go up and down completely randomly.

Pair Corralation between Citigroup and 456837AW3

Taking into account the 90-day investment horizon Citigroup is expected to generate 5.16 times more return on investment than 456837AW3. However, Citigroup is 5.16 times more volatile than ING GROEP NV. It trades about 0.12 of its potential returns per unit of risk. ING GROEP NV is currently generating about -0.16 per unit of risk. If you would invest  6,247  in Citigroup on September 19, 2024 and sell it today you would earn a total of  865.00  from holding Citigroup or generate 13.85% return on investment over 90 days.

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

Citigroup  vs.  ING GROEP NV

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.

ING GROEP NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING GROEP NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 456837AW3 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 456837AW3

The main advantage of trading using opposite Citigroup and 456837AW3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 456837AW3 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 456837AW3 will offset losses from the drop in 456837AW3's long position.

The idea behind Citigroup and ING GROEP NV 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.