Correlation Between Citigroup and Workforce Holdings

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

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

Diversification Opportunities for Citigroup and Workforce Holdings

-0.54

Correlation Coefficient

Citigroup  Workforce Holdings

Excellent diversification

The 3 months correlation between Citigroup and Workforce is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Workforce Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workforce Holdings 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 Workforce Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workforce Holdings has no effect on the direction of Citigroup i.e., Citigroup and Workforce Holdings go up and down completely randomly.

Pair Corralation between Citigroup and Workforce Holdings

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Workforce Holdings. In addition to that, Citigroup is 7.55 times more volatile than Workforce Holdings. It trades about -0.09 of its total potential returns per unit of risk. Workforce Holdings is currently generating about 0.23 per unit of volatility. If you would invest  14,500  in Workforce Holdings on September 24, 2024 and sell it today you would earn a total of  100.00  from holding Workforce Holdings or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Citigroup  vs.  Workforce Holdings

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Workforce Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Workforce Holdings 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Citigroup and Workforce Holdings

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

The idea behind Citigroup and Workforce Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.