Correlation Between Citigroup and Weebit Nano

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

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

Diversification Opportunities for Citigroup and Weebit Nano

0.82

Correlation Coefficient

Citigroup  Weebit Nano

Very poor diversification

The 3 months correlation between Citigroup and Weebit is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Weebit Nano Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weebit Nano Limited 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 Weebit Nano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weebit Nano Limited has no effect on the direction of Citigroup i.e., Citigroup and Weebit Nano go up and down completely randomly.

Pair Corralation between Citigroup and Weebit Nano

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.62 times less return on investment than Weebit Nano. But when comparing it to its historical volatility, Citigroup is 3.45 times less risky than Weebit Nano. It trades about 0.08 of its potential returns per unit of risk. Weebit Nano Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  147.00  in Weebit Nano Limited on September 20, 2024 and sell it today you would earn a total of  39.00  from holding Weebit Nano Limited or generate 26.53% return on investment over 90 days.

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

Citigroup  vs.  Weebit Nano Limited

Citigroup

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.

Weebit Nano Limited

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Weebit Nano Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Weebit Nano reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Weebit Nano

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

The idea behind Citigroup and Weebit Nano Limited 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.