Correlation Between Citigroup and Creative Realities

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

Diversification Opportunities for Citigroup and Creative Realities

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Citigroup and Creative is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Creative Realities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Realities 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 Creative Realities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Realities has no effect on the direction of Citigroup i.e., Citigroup and Creative Realities go up and down completely randomly.

Pair Corralation between Citigroup and Creative Realities

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.09 times less return on investment than Creative Realities. But when comparing it to its historical volatility, Citigroup is 2.88 times less risky than Creative Realities. It trades about 0.07 of its potential returns per unit of risk. Creative Realities is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  183.00  in Creative Realities on August 24, 2024 and sell it today you would earn a total of  162.00  from holding Creative Realities or generate 88.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  Creative Realities

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) 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.
Creative Realities 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Creative Realities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Citigroup and Creative Realities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Creative Realities

The main advantage of trading using opposite Citigroup and Creative Realities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Creative Realities 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 Creative Realities will offset losses from the drop in Creative Realities' long position.
The idea behind Citigroup and Creative Realities 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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