Correlation Between Citigroup and SFCCN

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

By analyzing existing cross correlation between Citigroup and SFCCN 53 13 MAY 28, you can compare the effects of market volatilities on Citigroup and SFCCN 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 SFCCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and SFCCN.

Diversification Opportunities for Citigroup and SFCCN

0.88

Correlation Coefficient

Citigroup  SFCCN

Very poor diversification

The 3 months correlation between Citigroup and SFCCN is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SFCCN 53 13 MAY 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFCCN 53 13 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 SFCCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFCCN 53 13 has no effect on the direction of Citigroup i.e., Citigroup and SFCCN go up and down completely randomly.

Pair Corralation between Citigroup and SFCCN

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.73 times more return on investment than SFCCN. However, Citigroup is 4.73 times more volatile than SFCCN 53 13 MAY 28. It trades about 0.18 of its potential returns per unit of risk. SFCCN 53 13 MAY 28 is currently generating about 0.01 per unit of risk. If you would invest  5,788  in Citigroup on September 16, 2024 and sell it today you would earn a total of  1,313  from holding Citigroup or generate 22.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	35.38%
Values	Daily Returns

Citigroup  vs.  SFCCN 53 13 MAY 28

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

SFCCN 53 13

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SFCCN 53 13 MAY 28 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SFCCN 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 SFCCN

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

The idea behind Citigroup and SFCCN 53 13 MAY 28 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.