Correlation Between Citigroup and Vertex Resource

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

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

Diversification Opportunities for Citigroup and Vertex Resource

0.08

Correlation Coefficient

Citigroup  Vertex Resource

Significant diversification

The 3 months correlation between Citigroup and Vertex is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Vertex Resource Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertex Resource Group 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 Vertex Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertex Resource Group has no effect on the direction of Citigroup i.e., Citigroup and Vertex Resource go up and down completely randomly.

Pair Corralation between Citigroup and Vertex Resource

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.12 times less return on investment than Vertex Resource. But when comparing it to its historical volatility, Citigroup is 2.31 times less risky than Vertex Resource. It trades about 0.04 of its potential returns per unit of risk. Vertex Resource Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Vertex Resource Group on December 21, 2024 and sell it today you would earn a total of  1.00  from holding Vertex Resource Group or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Citigroup  vs.  Vertex Resource Group

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Vertex Resource Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vertex Resource Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Vertex Resource may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Citigroup and Vertex Resource

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

The idea behind Citigroup and Vertex Resource Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.