Correlation Between Citigroup and YouGov Plc

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

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

Diversification Opportunities for Citigroup and YouGov Plc

0.4

Correlation Coefficient

Citigroup  YouGov Plc

Very weak diversification

The 3 months correlation between Citigroup and YouGov is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and YouGov plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YouGov plc 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 YouGov Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YouGov plc has no effect on the direction of Citigroup i.e., Citigroup and YouGov Plc go up and down completely randomly.

Pair Corralation between Citigroup and YouGov Plc

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.41 times more return on investment than YouGov Plc. However, Citigroup is 2.42 times less risky than YouGov Plc. It trades about -0.05 of its potential returns per unit of risk. YouGov plc is currently generating about -0.1 per unit of risk. If you would invest  7,139  in Citigroup on October 3, 2024 and sell it today you would lose (100.00) from holding Citigroup or give up 1.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

Citigroup  vs.  YouGov plc

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 unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

YouGov plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YouGov plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, YouGov Plc is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and YouGov Plc

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

The idea behind Citigroup and YouGov plc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.