Correlation Between Citigroup and Lixte Biotechnology

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

Diversification Opportunities for Citigroup and Lixte Biotechnology

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Citigroup and Lixte is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Lixte Biotechnology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixte Biotechnology 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 Lixte Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixte Biotechnology has no effect on the direction of Citigroup i.e., Citigroup and Lixte Biotechnology go up and down completely randomly.

Pair Corralation between Citigroup and Lixte Biotechnology

Taking into account the 90-day investment horizon Citigroup is expected to generate 7.98 times less return on investment than Lixte Biotechnology. But when comparing it to its historical volatility, Citigroup is 10.83 times less risky than Lixte Biotechnology. It trades about 0.08 of its potential returns per unit of risk. Lixte Biotechnology Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7.70  in Lixte Biotechnology Holdings on August 31, 2024 and sell it today you would lose (4.92) from holding Lixte Biotechnology Holdings or give up 63.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  Lixte Biotechnology Holdings

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 10 (%) 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.
Lixte Biotechnology 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Lixte Biotechnology Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lixte Biotechnology showed solid returns over the last few months and may actually be approaching a breakup point.

Citigroup and Lixte Biotechnology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Lixte Biotechnology

The main advantage of trading using opposite Citigroup and Lixte Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Lixte Biotechnology 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 Lixte Biotechnology will offset losses from the drop in Lixte Biotechnology's long position.
The idea behind Citigroup and Lixte Biotechnology Holdings 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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