Correlation Between Citigroup and Vericity

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

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

Diversification Opportunities for Citigroup and Vericity

0.0

Correlation Coefficient

Citigroup  Vericity

Pay attention - limited upside

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

Pair Corralation between Citigroup and Vericity

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.09 times less return on investment than Vericity. But when comparing it to its historical volatility, Citigroup is 3.58 times less risky than Vericity. It trades about 0.07 of its potential returns per unit of risk. Vericity is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  750.00  in Vericity on September 20, 2024 and sell it today you would earn a total of  393.00  from holding Vericity or generate 52.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	76.41%
Values	Daily Returns

Citigroup  vs.  Vericity

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 unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vericity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vericity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Vericity is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Vericity

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

The idea behind Citigroup and Vericity 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.