Correlation Between Citigroup and WATER WAYS

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

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

Diversification Opportunities for Citigroup and WATER WAYS

0.11

Correlation Coefficient

Citigroup  WATER WAYS

Average diversification

The 3 months correlation between Citigroup and WATER is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and WATER WAYS TECHS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WATER WAYS TECHS 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 WATER WAYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WATER WAYS TECHS has no effect on the direction of Citigroup i.e., Citigroup and WATER WAYS go up and down completely randomly.

Pair Corralation between Citigroup and WATER WAYS

Taking into account the 90-day investment horizon Citigroup is expected to generate 119.15 times less return on investment than WATER WAYS. But when comparing it to its historical volatility, Citigroup is 85.83 times less risky than WATER WAYS. It trades about 0.13 of its potential returns per unit of risk. WATER WAYS TECHS is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.20  in WATER WAYS TECHS on September 22, 2024 and sell it today you would earn a total of  0.15  from holding WATER WAYS TECHS or generate 75.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Citigroup  vs.  WATER WAYS TECHS

Citigroup

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WATER WAYS TECHS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WATER WAYS TECHS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WATER WAYS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and WATER WAYS

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

The idea behind Citigroup and WATER WAYS TECHS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.