Correlation Between Citigroup and WHG REAL

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

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

Diversification Opportunities for Citigroup and WHG REAL

-0.29

Correlation Coefficient

Citigroup  WHG REAL

Very good diversification

The 3 months correlation between Citigroup and WHG is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and WHG REAL ESTATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHG REAL ESTATE 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 WHG REAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHG REAL ESTATE has no effect on the direction of Citigroup i.e., Citigroup and WHG REAL go up and down completely randomly.

Pair Corralation between Citigroup and WHG REAL

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.7 times more return on investment than WHG REAL. However, Citigroup is 1.43 times less risky than WHG REAL. It trades about 0.07 of its potential returns per unit of risk. WHG REAL ESTATE is currently generating about 0.03 per unit of risk. If you would invest  4,806  in Citigroup on October 23, 2024 and sell it today you would earn a total of  3,342  from holding Citigroup or generate 69.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Citigroup  vs.  WHG REAL ESTATE

Citigroup

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

WHG REAL ESTATE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WHG REAL ESTATE has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong technical and fundamental indicators, WHG REAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and WHG REAL

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

The idea behind Citigroup and WHG REAL ESTATE 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 Transaction History module to view history of all your transactions and understand their impact on performance.