Correlation Between Citigroup and Werner Enterprises

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

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

Diversification Opportunities for Citigroup and Werner Enterprises

-0.55

Correlation Coefficient

Citigroup  Werner Enterprises

Excellent diversification

The 3 months correlation between Citigroup and Werner is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Werner Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprises 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 Werner Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Werner Enterprises has no effect on the direction of Citigroup i.e., Citigroup and Werner Enterprises go up and down completely randomly.

Pair Corralation between Citigroup and Werner Enterprises

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.28 times more return on investment than Werner Enterprises. However, Citigroup is 1.28 times more volatile than Werner Enterprises. It trades about 0.0 of its potential returns per unit of risk. Werner Enterprises is currently generating about -0.47 per unit of risk. If you would invest  7,939  in Citigroup on November 29, 2024 and sell it today you would lose (32.00) from holding Citigroup or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Citigroup  vs.  Werner Enterprises

Citigroup

Risk-Adjusted Performance

OK

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.

Werner Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Werner Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Citigroup and Werner Enterprises

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

The idea behind Citigroup and Werner Enterprises 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.