Correlation Between Citigroup and Direxion Work

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

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

Diversification Opportunities for Citigroup and Direxion Work

0.77

Correlation Coefficient

Citigroup  Direxion Work

Poor diversification

The 3 months correlation between Citigroup and Direxion is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Direxion Work From in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Work From 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 Direxion Work. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Work From has no effect on the direction of Citigroup i.e., Citigroup and Direxion Work go up and down completely randomly.

Pair Corralation between Citigroup and Direxion Work

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.25 times more return on investment than Direxion Work. However, Citigroup is 1.25 times more volatile than Direxion Work From. It trades about 0.04 of its potential returns per unit of risk. Direxion Work From is currently generating about -0.06 per unit of risk. If you would invest  6,871  in Citigroup on December 20, 2024 and sell it today you would earn a total of  273.00  from holding Citigroup or generate 3.97% return on investment over 90 days.

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

Citigroup  vs.  Direxion Work From

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.

Direxion Work From

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Work From has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Direxion Work is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Citigroup and Direxion Work

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

The idea behind Citigroup and Direxion Work From 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.