Correlation Between Citigroup and VTv Therapeutics

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

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

Diversification Opportunities for Citigroup and VTv Therapeutics

0.4

Correlation Coefficient

Citigroup  VTv Therapeutics

Very weak diversification

The 3 months correlation between Citigroup and VTv is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and vTv Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on vTv Therapeutics 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 VTv Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of vTv Therapeutics has no effect on the direction of Citigroup i.e., Citigroup and VTv Therapeutics go up and down completely randomly.

Pair Corralation between Citigroup and VTv Therapeutics

Taking into account the 90-day investment horizon Citigroup is expected to generate 8.96 times less return on investment than VTv Therapeutics. But when comparing it to its historical volatility, Citigroup is 4.28 times less risky than VTv Therapeutics. It trades about 0.04 of its potential returns per unit of risk. vTv Therapeutics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,320  in vTv Therapeutics on December 27, 2024 and sell it today you would earn a total of  401.00  from holding vTv Therapeutics or generate 30.38% return on investment over 90 days.

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

Citigroup  vs.  vTv Therapeutics

Citigroup

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 3 (%) 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.

vTv Therapeutics

Risk-Adjusted Performance

Modest

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

Pair Trading with Citigroup and VTv Therapeutics

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

The idea behind Citigroup and vTv Therapeutics 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.