Correlation Between Citigroup and Wasatch Greater

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

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

Diversification Opportunities for Citigroup and Wasatch Greater

0.15

Correlation Coefficient

Citigroup  Wasatch Greater

Average diversification

The 3 months correlation between Citigroup and Wasatch is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Wasatch Greater China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Greater China 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 Wasatch Greater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Greater China has no effect on the direction of Citigroup i.e., Citigroup and Wasatch Greater go up and down completely randomly.

Pair Corralation between Citigroup and Wasatch Greater

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.52 times more return on investment than Wasatch Greater. However, Citigroup is 1.91 times less risky than Wasatch Greater. It trades about 0.22 of its potential returns per unit of risk. Wasatch Greater China is currently generating about 0.01 per unit of risk. If you would invest  6,900  in Citigroup on September 17, 2024 and sell it today you would earn a total of  249.00  from holding Citigroup or generate 3.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Citigroup  vs.  Wasatch Greater China

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.

Wasatch Greater China

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch Greater China are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Wasatch Greater showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Wasatch Greater

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

The idea behind Citigroup and Wasatch Greater China 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.