Correlation Between Citigroup and Volati AB

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

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

Diversification Opportunities for Citigroup and Volati AB

0.14

Correlation Coefficient

Citigroup  Volati AB

Average diversification

The 3 months correlation between Citigroup and Volati is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Volati AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volati AB 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 Volati AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volati AB has no effect on the direction of Citigroup i.e., Citigroup and Volati AB go up and down completely randomly.

Pair Corralation between Citigroup and Volati AB

Taking into account the 90-day investment horizon Citigroup is expected to generate 6.84 times less return on investment than Volati AB. But when comparing it to its historical volatility, Citigroup is 1.2 times less risky than Volati AB. It trades about 0.01 of its potential returns per unit of risk. Volati AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,810  in Volati AB on December 30, 2024 and sell it today you would earn a total of  1,130  from holding Volati AB or generate 11.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Citigroup  vs.  Volati AB

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.

Volati AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Volati AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Volati AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Volati AB

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

The idea behind Citigroup and Volati AB 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.