Correlation Between Citigroup and 694308KD8

Can any of the company-specific risk be diversified away by investing in both Citigroup and 694308KD8 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 694308KD8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and PCG 525 01 MAR 52, you can compare the effects of market volatilities on Citigroup and 694308KD8 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 694308KD8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 694308KD8.

Diversification Opportunities for Citigroup and 694308KD8

-0.51

Correlation Coefficient

Citigroup  694308KD8

Excellent diversification

The 3 months correlation between Citigroup and 694308KD8 is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PCG 525 01 MAR 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCG 525 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 694308KD8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCG 525 01 has no effect on the direction of Citigroup i.e., Citigroup and 694308KD8 go up and down completely randomly.

Pair Corralation between Citigroup and 694308KD8

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the 694308KD8. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.11 times less risky than 694308KD8. The stock trades about -0.03 of its potential returns per unit of risk. The PCG 525 01 MAR 52 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,058  in PCG 525 01 MAR 52 on September 23, 2024 and sell it today you would earn a total of  131.00  from holding PCG 525 01 MAR 52 or generate 1.45% return on investment over 90 days.

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

Citigroup  vs.  PCG 525 01 MAR 52

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PCG 525 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCG 525 01 MAR 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 694308KD8 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 694308KD8

The main advantage of trading using opposite Citigroup and 694308KD8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 694308KD8 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 694308KD8 will offset losses from the drop in 694308KD8's long position.

The idea behind Citigroup and PCG 525 01 MAR 52 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.