Correlation Between Catalyst Pharmaceuticals and CITIGROUP

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

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

Diversification Opportunities for Catalyst Pharmaceuticals and CITIGROUP

0.21

Correlation Coefficient

Catalyst Pharmaceuticals  CITIGROUP

Modest diversification

The 3 months correlation between Catalyst and CITIGROUP is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and CITIGROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP INC and Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals 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 INC has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and CITIGROUP go up and down completely randomly.

Pair Corralation between Catalyst Pharmaceuticals and CITIGROUP

Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to under-perform the CITIGROUP. In addition to that, Catalyst Pharmaceuticals is 1.26 times more volatile than CITIGROUP INC. It trades about -0.24 of its total potential returns per unit of risk. CITIGROUP INC is currently generating about -0.22 per unit of volatility. If you would invest  9,599  in CITIGROUP INC on October 10, 2024 and sell it today you would lose (727.00) from holding CITIGROUP INC or give up 7.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Catalyst Pharmaceuticals  vs.  CITIGROUP INC

Catalyst Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalyst Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Catalyst Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CITIGROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIGROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CITIGROUP INC investors.

Pair Trading with Catalyst Pharmaceuticals and CITIGROUP

The main advantage of trading using opposite Catalyst Pharmaceuticals and CITIGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals and CITIGROUP INC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.