Correlation Between Citigroup and Vastned Retail

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

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

Diversification Opportunities for Citigroup and Vastned Retail

-0.06

Correlation Coefficient

Citigroup  Vastned Retail

Good diversification

The 3 months correlation between Citigroup and Vastned is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Vastned Retail Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail Belgium 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 Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail Belgium has no effect on the direction of Citigroup i.e., Citigroup and Vastned Retail go up and down completely randomly.

Pair Corralation between Citigroup and Vastned Retail

Taking into account the 90-day investment horizon Citigroup is expected to generate 3.02 times less return on investment than Vastned Retail. In addition to that, Citigroup is 1.55 times more volatile than Vastned Retail Belgium. It trades about 0.01 of its total potential returns per unit of risk. Vastned Retail Belgium is currently generating about 0.07 per unit of volatility. If you would invest  2,790  in Vastned Retail Belgium on December 30, 2024 and sell it today you would earn a total of  150.00  from holding Vastned Retail Belgium or generate 5.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Citigroup  vs.  Vastned Retail Belgium

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.

Vastned Retail Belgium

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vastned Retail Belgium are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Vastned Retail 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 Vastned Retail

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

The idea behind Citigroup and Vastned Retail Belgium 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.