Correlation Between Citigroup and LEO LITHIUM

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

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

Diversification Opportunities for Citigroup and LEO LITHIUM

0.0

Correlation Coefficient

Citigroup  LEO LITHIUM

Pay attention - limited upside

The 3 months correlation between Citigroup and LEO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and LEO LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEO LITHIUM LTD 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 LEO LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEO LITHIUM LTD has no effect on the direction of Citigroup i.e., Citigroup and LEO LITHIUM go up and down completely randomly.

Pair Corralation between Citigroup and LEO LITHIUM

If you would invest  6,863  in Citigroup on October 9, 2024 and sell it today you would earn a total of  411.00  from holding Citigroup or generate 5.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	92.5%
Values	Daily Returns

Citigroup  vs.  LEO LITHIUM LTD

Citigroup

Risk-Adjusted Performance

10 of 100

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.

LEO LITHIUM LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LEO LITHIUM LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LEO LITHIUM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Citigroup and LEO LITHIUM

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

The idea behind Citigroup and LEO LITHIUM LTD 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.