Correlation Between Citigroup and Baywa AG

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Can any of the company-specific risk be diversified away by investing in both Citigroup and Baywa AG 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 Baywa AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Baywa AG Vink, you can compare the effects of market volatilities on Citigroup and Baywa AG 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 Baywa AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Baywa AG.

Diversification Opportunities for Citigroup and Baywa AG

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Citigroup and Baywa is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Baywa AG Vink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baywa AG Vink 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 Baywa AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baywa AG Vink has no effect on the direction of Citigroup i.e., Citigroup and Baywa AG go up and down completely randomly.

Pair Corralation between Citigroup and Baywa AG

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.47 times more return on investment than Baywa AG. However, Citigroup is 2.13 times less risky than Baywa AG. It trades about 0.08 of its potential returns per unit of risk. Baywa AG Vink is currently generating about -0.06 per unit of risk. If you would invest  4,746  in Citigroup on November 2, 2024 and sell it today you would earn a total of  3,474  from holding Citigroup or generate 73.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.6%
ValuesDaily Returns

Citigroup  vs.  Baywa AG Vink

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.
Baywa AG Vink 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Baywa AG Vink are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Baywa AG may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Citigroup and Baywa AG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Baywa AG

The main advantage of trading using opposite Citigroup and Baywa AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Baywa AG 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 Baywa AG will offset losses from the drop in Baywa AG's long position.
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The idea behind Citigroup and Baywa AG Vink 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 Stocks Directory module to find actively traded stocks across global markets.

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