Correlation Between Citigroup and Pacific Funds

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

Diversification Opportunities for Citigroup and Pacific Funds

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Citigroup and PACIFIC is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Pacific Funds Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Short 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Short has no effect on the direction of Citigroup i.e., Citigroup and Pacific Funds go up and down completely randomly.

Pair Corralation between Citigroup and Pacific Funds

Taking into account the 90-day investment horizon Citigroup is expected to generate 20.97 times more return on investment than Pacific Funds. However, Citigroup is 20.97 times more volatile than Pacific Funds Short. It trades about 0.26 of its potential returns per unit of risk. Pacific Funds Short is currently generating about 0.09 per unit of risk. If you would invest  6,361  in Citigroup on September 1, 2024 and sell it today you would earn a total of  726.00  from holding Citigroup or generate 11.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Citigroup  vs.  Pacific Funds Short

 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.
Pacific Funds Short 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Funds Short are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pacific Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Citigroup and Pacific Funds Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and Pacific Funds

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

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