Correlation Between Citigroup and Ninety One

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

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

Diversification Opportunities for Citigroup and Ninety One

0.83

Correlation Coefficient

Citigroup  Ninety One

Very poor diversification

The 3 months correlation between Citigroup and Ninety is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Ninety One International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninety One International 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 Ninety One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninety One International has no effect on the direction of Citigroup i.e., Citigroup and Ninety One go up and down completely randomly.

Pair Corralation between Citigroup and Ninety One

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.29 times more return on investment than Ninety One. However, Citigroup is 2.29 times more volatile than Ninety One International. It trades about 0.09 of its potential returns per unit of risk. Ninety One International is currently generating about 0.11 per unit of risk. If you would invest  7,101  in Citigroup on December 4, 2024 and sell it today you would earn a total of  616.00  from holding Citigroup or generate 8.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Citigroup  vs.  Ninety One International

Citigroup

Risk-Adjusted Performance

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 April 2025.

Ninety One International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ninety One International are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ninety One 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 Ninety One

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

The idea behind Citigroup and Ninety One International 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.