Correlation Between Citigroup and VARNO

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

By analyzing existing cross correlation between Citigroup and VARNO 75 15 JAN 28, you can compare the effects of market volatilities on Citigroup and VARNO 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 VARNO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and VARNO.

Diversification Opportunities for Citigroup and VARNO

-0.15

Correlation Coefficient

Citigroup  VARNO

Good diversification

The 3 months correlation between Citigroup and VARNO is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and VARNO 75 15 JAN 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VARNO 75 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 VARNO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VARNO 75 15 has no effect on the direction of Citigroup i.e., Citigroup and VARNO go up and down completely randomly.

Pair Corralation between Citigroup and VARNO

Taking into account the 90-day investment horizon Citigroup is expected to generate 9.4 times more return on investment than VARNO. However, Citigroup is 9.4 times more volatile than VARNO 75 15 JAN 28. It trades about 0.01 of its potential returns per unit of risk. VARNO 75 15 JAN 28 is currently generating about 0.13 per unit of risk. If you would invest  6,991  in Citigroup on December 30, 2024 and sell it today you would earn a total of  42.00  from holding Citigroup or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.13%
Values	Daily Returns

Citigroup  vs.  VARNO 75 15 JAN 28

Citigroup

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 1 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

VARNO 75 15

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VARNO 75 15 JAN 28 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, VARNO 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 VARNO

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

The idea behind Citigroup and VARNO 75 15 JAN 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.