Correlation Between Citigroup and 88339WAA4

Can any of the company-specific risk be diversified away by investing in both Citigroup and 88339WAA4 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 88339WAA4 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and WMB 35 15 OCT 51, you can compare the effects of market volatilities on Citigroup and 88339WAA4 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 88339WAA4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 88339WAA4.

Diversification Opportunities for Citigroup and 88339WAA4

-0.41

Correlation Coefficient

Citigroup  88339WAA4

Very good diversification

The 3 months correlation between Citigroup and 88339WAA4 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and WMB 35 15 OCT 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WMB 35 15 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 88339WAA4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WMB 35 15 has no effect on the direction of Citigroup i.e., Citigroup and 88339WAA4 go up and down completely randomly.

Pair Corralation between Citigroup and 88339WAA4

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the 88339WAA4. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 2.22 times less risky than 88339WAA4. The stock trades about -0.09 of its potential returns per unit of risk. The WMB 35 15 OCT 51 is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  7,168  in WMB 35 15 OCT 51 on September 24, 2024 and sell it today you would lose (122.00) from holding WMB 35 15 OCT 51 or give up 1.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.95%
Values	Daily Returns

Citigroup  vs.  WMB 35 15 OCT 51

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.

WMB 35 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WMB 35 15 OCT 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 88339WAA4 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 88339WAA4

The main advantage of trading using opposite Citigroup and 88339WAA4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 88339WAA4 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 88339WAA4 will offset losses from the drop in 88339WAA4's long position.

The idea behind Citigroup and WMB 35 15 OCT 51 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.