Correlation Between Citigroup and Veranda Learning

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

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

Diversification Opportunities for Citigroup and Veranda Learning

-0.83

Correlation Coefficient

Citigroup  Veranda Learning

Pay attention - limited upside

The 3 months correlation between Citigroup and Veranda is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Veranda Learning Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veranda Learning Sol 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 Veranda Learning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veranda Learning Sol has no effect on the direction of Citigroup i.e., Citigroup and Veranda Learning go up and down completely randomly.

Pair Corralation between Citigroup and Veranda Learning

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.01 times less return on investment than Veranda Learning. But when comparing it to its historical volatility, Citigroup is 3.12 times less risky than Veranda Learning. It trades about 0.25 of its potential returns per unit of risk. Veranda Learning Solutions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  26,140  in Veranda Learning Solutions on September 13, 2024 and sell it today you would earn a total of  981.00  from holding Veranda Learning Solutions or generate 3.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Veranda Learning Solutions

Citigroup

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Veranda Learning Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veranda Learning Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citigroup and Veranda Learning

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

The idea behind Citigroup and Veranda Learning 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.