Correlation Between Citigroup and PulteGroup,

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

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

Diversification Opportunities for Citigroup and PulteGroup,

-0.46

Correlation Coefficient

Citigroup  PulteGroup,

Very good diversification

The 3 months correlation between Citigroup and PulteGroup, is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and PulteGroup, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PulteGroup, 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 PulteGroup,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PulteGroup, has no effect on the direction of Citigroup i.e., Citigroup and PulteGroup, go up and down completely randomly.

Pair Corralation between Citigroup and PulteGroup,

Assuming the 90 days trading horizon Citigroup is expected to generate 0.92 times more return on investment than PulteGroup,. However, Citigroup is 1.08 times less risky than PulteGroup,. It trades about 0.06 of its potential returns per unit of risk. PulteGroup, is currently generating about -0.23 per unit of risk. If you would invest  7,241  in Citigroup on October 6, 2024 and sell it today you would earn a total of  100.00  from holding Citigroup or generate 1.38% return on investment over 90 days.

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

Citigroup  vs.  PulteGroup,

Citigroup

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) 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.

PulteGroup,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PulteGroup, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, PulteGroup, 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 PulteGroup,

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

The idea behind Citigroup and PulteGroup, 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.