Correlation Between Citigroup and 532457CG1

Can any of the company-specific risk be diversified away by investing in both Citigroup and 532457CG1 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 532457CG1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and LLY 4875 27 FEB 53, you can compare the effects of market volatilities on Citigroup and 532457CG1 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 532457CG1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 532457CG1.

Diversification Opportunities for Citigroup and 532457CG1

-0.61

Correlation Coefficient

Citigroup  532457CG1

Excellent diversification

The 3 months correlation between Citigroup and 532457CG1 is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LLY 4875 27 FEB 53 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LLY 4875 27 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 532457CG1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LLY 4875 27 has no effect on the direction of Citigroup i.e., Citigroup and 532457CG1 go up and down completely randomly.

Pair Corralation between Citigroup and 532457CG1

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the 532457CG1. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 2.53 times less risky than 532457CG1. The stock trades about -0.09 of its potential returns per unit of risk. The LLY 4875 27 FEB 53 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9,487  in LLY 4875 27 FEB 53 on September 24, 2024 and sell it today you would earn a total of  432.00  from holding LLY 4875 27 FEB 53 or generate 4.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  LLY 4875 27 FEB 53

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 uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

LLY 4875 27

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LLY 4875 27 FEB 53 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 532457CG1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and 532457CG1

The main advantage of trading using opposite Citigroup and 532457CG1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 532457CG1 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 532457CG1 will offset losses from the drop in 532457CG1's long position.

The idea behind Citigroup and LLY 4875 27 FEB 53 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.