Correlation Between Citigroup and Walmart

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

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

Diversification Opportunities for Citigroup and Walmart

0.88

Correlation Coefficient

Citigroup  Walmart

Very poor diversification

The 3 months correlation between Citigroup and Walmart is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Citigroup i.e., Citigroup and Walmart go up and down completely randomly.

Pair Corralation between Citigroup and Walmart

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Walmart. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 1.36 times less risky than Walmart. The stock trades about -0.03 of its potential returns per unit of risk. The Walmart is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,286  in Walmart on September 23, 2024 and sell it today you would earn a total of  200.00  from holding Walmart or generate 6.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Walmart

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Walmart

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Walmart sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Walmart

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

The idea behind Citigroup and Walmart 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.