Correlation Between Clave Indices and Citigroup

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

By analyzing existing cross correlation between Clave Indices De and Citigroup, you can compare the effects of market volatilities on Clave Indices and Citigroup 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 Clave Indices with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clave Indices and Citigroup.

Diversification Opportunities for Clave Indices and Citigroup

-0.65

Correlation Coefficient

Clave Indices  Citigroup

Excellent diversification

The 3 months correlation between Clave and Citigroup is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Clave Indices De and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Clave Indices 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 Clave Indices De are associated (or correlated) with Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Clave Indices i.e., Clave Indices and Citigroup go up and down completely randomly.

Pair Corralation between Clave Indices and Citigroup

Assuming the 90 days trading horizon Clave Indices De is expected to under-perform the Citigroup. But the stock apears to be less risky and, when comparing its historical volatility, Clave Indices De is 2.34 times less risky than Citigroup. The stock trades about -0.11 of its potential returns per unit of risk. The Citigroup is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  5,612  in Citigroup on September 5, 2024 and sell it today you would earn a total of  1,626  from holding Citigroup or generate 28.97% return on investment over 90 days.

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

Clave Indices De  vs.  Citigroup

Clave Indices De

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clave Indices De has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Clave Indices is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Citigroup

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Citigroup sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clave Indices and Citigroup

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

The idea behind Clave Indices De and Citigroup 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.