Correlation Between Citigroup and 91529YAL0

Can any of the company-specific risk be diversified away by investing in both Citigroup and 91529YAL0 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 91529YAL0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citigroup and UNUM GROUP 3875, you can compare the effects of market volatilities on Citigroup and 91529YAL0 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 91529YAL0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 91529YAL0.

Diversification Opportunities for Citigroup and 91529YAL0

0.21

Correlation Coefficient

Citigroup  91529YAL0

Modest diversification

The 3 months correlation between Citigroup and 91529YAL0 is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and UNUM GROUP 3875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNUM GROUP 3875 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 91529YAL0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNUM GROUP 3875 has no effect on the direction of Citigroup i.e., Citigroup and 91529YAL0 go up and down completely randomly.

Pair Corralation between Citigroup and 91529YAL0

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.18 times more return on investment than 91529YAL0. However, Citigroup is 3.18 times more volatile than UNUM GROUP 3875. It trades about 0.04 of its potential returns per unit of risk. UNUM GROUP 3875 is currently generating about -0.02 per unit of risk. If you would invest  6,929  in Citigroup on December 23, 2024 and sell it today you would earn a total of  269.00  from holding Citigroup or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	57.38%
Values	Daily Returns

Citigroup  vs.  UNUM GROUP 3875

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Citigroup is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

UNUM GROUP 3875

Risk-Adjusted Performance

Very Weak

Over the last 90 days UNUM GROUP 3875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 91529YAL0 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 91529YAL0

The main advantage of trading using opposite Citigroup and 91529YAL0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 91529YAL0 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 91529YAL0 will offset losses from the drop in 91529YAL0's long position.

The idea behind Citigroup and UNUM GROUP 3875 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.