Correlation Between OVS SpA and Citigroup

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

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

Diversification Opportunities for OVS SpA and Citigroup

0.71

Correlation Coefficient

OVS SpA  Citigroup

Poor diversification

The 3 months correlation between OVS and Citigroup is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding OVS SpA and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and OVS SpA 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 OVS SpA 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 OVS SpA i.e., OVS SpA and Citigroup go up and down completely randomly.

Pair Corralation between OVS SpA and Citigroup

Considering the 90-day investment horizon OVS SpA is expected to generate 2.21 times less return on investment than Citigroup. But when comparing it to its historical volatility, OVS SpA is 1.2 times less risky than Citigroup. It trades about 0.03 of its potential returns per unit of risk. Citigroup is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,600  in Citigroup on October 4, 2024 and sell it today you would earn a total of  2,439  from holding Citigroup or generate 53.02% return on investment over 90 days.

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

OVS SpA  vs.  Citigroup

OVS SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OVS SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, OVS SpA is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OVS SpA and Citigroup

The main advantage of trading using opposite OVS SpA and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OVS SpA 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 OVS SpA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..