Correlation Between Citigroup and Universal Tracking

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

By analyzing existing cross correlation between Citigroup and Universal Tracking Solutions, you can compare the effects of market volatilities on Citigroup and Universal Tracking 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 Universal Tracking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Universal Tracking.

Diversification Opportunities for Citigroup and Universal Tracking

0.0

Correlation Coefficient

Citigroup  Universal Tracking

Pay attention - limited upside

The 3 months correlation between Citigroup and Universal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Universal Tracking Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Tracking 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 Universal Tracking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Tracking has no effect on the direction of Citigroup i.e., Citigroup and Universal Tracking go up and down completely randomly.

Pair Corralation between Citigroup and Universal Tracking

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.51 times less return on investment than Universal Tracking. But when comparing it to its historical volatility, Citigroup is 9.86 times less risky than Universal Tracking. It trades about 0.07 of its potential returns per unit of risk. Universal Tracking Solutions is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.20  in Universal Tracking Solutions on September 22, 2024 and sell it today you would lose (2.19) from holding Universal Tracking Solutions or give up 99.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Citigroup  vs.  Universal Tracking Solutions

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Universal Tracking

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Tracking Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Universal Tracking is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Citigroup and Universal Tracking

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

The idea behind Citigroup and Universal Tracking Solutions 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .