Correlation Between Definitive Healthcare and CITIGROUP

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

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

Diversification Opportunities for Definitive Healthcare and CITIGROUP

0.11

Correlation Coefficient

Definitive Healthcare  CITIGROUP

Average diversification

The 3 months correlation between Definitive and CITIGROUP is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and CITIGROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP INC and Definitive Healthcare 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 Definitive Healthcare Corp 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 Definitive Healthcare i.e., Definitive Healthcare and CITIGROUP go up and down completely randomly.

Pair Corralation between Definitive Healthcare and CITIGROUP

Allowing for the 90-day total investment horizon Definitive Healthcare Corp is expected to under-perform the CITIGROUP. In addition to that, Definitive Healthcare is 1.5 times more volatile than CITIGROUP INC. It trades about -0.19 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	Insignificant
Accuracy	95.24%
Values	Daily Returns

Definitive Healthcare Corp  vs.  CITIGROUP INC

Definitive Healthcare

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Definitive Healthcare Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Definitive Healthcare is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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 Definitive Healthcare and CITIGROUP

The main advantage of trading using opposite Definitive Healthcare and CITIGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definitive Healthcare 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 Definitive Healthcare Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.