Correlation Between Citigroup and Cervus Equipment

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

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

Diversification Opportunities for Citigroup and Cervus Equipment

0.0

Correlation Coefficient

Citigroup  Cervus Equipment

Pay attention - limited upside

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

Pair Corralation between Citigroup and Cervus Equipment

If you would invest  6,245  in Citigroup on September 24, 2024 and sell it today you would earn a total of  674.00  from holding Citigroup or generate 10.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Citigroup  vs.  Cervus Equipment

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Cervus Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cervus Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Cervus Equipment is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Cervus Equipment

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

The idea behind Citigroup and Cervus Equipment 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.