Correlation Between Citigroup and Three Sixty

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

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

Diversification Opportunities for Citigroup and Three Sixty

-0.92

Correlation Coefficient

Citigroup  Three Sixty

Pay attention - limited upside

The 3 months correlation between Citigroup and Three is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Three Sixty Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Three Sixty Solar 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 Three Sixty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Three Sixty Solar has no effect on the direction of Citigroup i.e., Citigroup and Three Sixty go up and down completely randomly.

Pair Corralation between Citigroup and Three Sixty

Taking into account the 90-day investment horizon Citigroup is expected to generate 10.25 times less return on investment than Three Sixty. But when comparing it to its historical volatility, Citigroup is 28.76 times less risky than Three Sixty. It trades about 0.08 of its potential returns per unit of risk. Three Sixty Solar is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  52.00  in Three Sixty Solar on September 15, 2024 and sell it today you would lose (51.99) from holding Three Sixty Solar or give up 99.98% of portfolio value over 90 days.

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

Citigroup  vs.  Three Sixty Solar

Citigroup

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) 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.

Three Sixty Solar

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Three Sixty Solar are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Three Sixty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Three Sixty

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

The idea behind Citigroup and Three Sixty Solar 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.