Correlation Between Citigroup and 50249AAF0

Can any of the company-specific risk be diversified away by investing in both Citigroup and 50249AAF0 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 50249AAF0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and LYB 125 01 OCT 25, you can compare the effects of market volatilities on Citigroup and 50249AAF0 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 50249AAF0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 50249AAF0.

Diversification Opportunities for Citigroup and 50249AAF0

-0.46

Correlation Coefficient

Citigroup  50249AAF0

Very good diversification

The 3 months correlation between Citigroup and 50249AAF0 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LYB 125 01 OCT 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYB 125 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 50249AAF0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYB 125 01 has no effect on the direction of Citigroup i.e., Citigroup and 50249AAF0 go up and down completely randomly.

Pair Corralation between Citigroup and 50249AAF0

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.04 times more return on investment than 50249AAF0. However, Citigroup is 1.04 times more volatile than LYB 125 01 OCT 25. It trades about 0.4 of its potential returns per unit of risk. LYB 125 01 OCT 25 is currently generating about -0.12 per unit of risk. If you would invest  6,977  in Citigroup on October 22, 2024 and sell it today you would earn a total of  1,022  from holding Citigroup or generate 14.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.21%
Values	Daily Returns

Citigroup  vs.  LYB 125 01 OCT 25

Citigroup

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 17 (%) 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.

LYB 125 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LYB 125 01 OCT 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 50249AAF0 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 50249AAF0

The main advantage of trading using opposite Citigroup and 50249AAF0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 50249AAF0 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 50249AAF0 will offset losses from the drop in 50249AAF0's long position.

The idea behind Citigroup and LYB 125 01 OCT 25 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.