Correlation Between Citigroup and BCULC

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

By analyzing existing cross correlation between Citigroup and BCULC 35 15 FEB 29, you can compare the effects of market volatilities on Citigroup and BCULC 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 BCULC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and BCULC.

Diversification Opportunities for Citigroup and BCULC

0.81

Correlation Coefficient

Citigroup  BCULC

Very poor diversification

The 3 months correlation between Citigroup and BCULC is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and BCULC 35 15 FEB 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCULC 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 BCULC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCULC 35 15 has no effect on the direction of Citigroup i.e., Citigroup and BCULC go up and down completely randomly.

Pair Corralation between Citigroup and BCULC

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.68 times more return on investment than BCULC. However, Citigroup is 3.68 times more volatile than BCULC 35 15 FEB 29. It trades about 0.16 of its potential returns per unit of risk. BCULC 35 15 FEB 29 is currently generating about -0.25 per unit of risk. If you would invest  6,209  in Citigroup on October 15, 2024 and sell it today you would earn a total of  1,068  from holding Citigroup or generate 17.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	36.07%
Values	Daily Returns

Citigroup  vs.  BCULC 35 15 FEB 29

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) 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.

BCULC 35 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCULC 35 15 FEB 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for BCULC 35 15 FEB 29 investors.

Pair Trading with Citigroup and BCULC

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

The idea behind Citigroup and BCULC 35 15 FEB 29 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.