Correlation Between Citigroup and RELX PLC

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Citigroup and RELX PLC 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 RELX PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and RELX PLC, you can compare the effects of market volatilities on Citigroup and RELX PLC 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 RELX PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and RELX PLC.

Diversification Opportunities for Citigroup and RELX PLC

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Citigroup and RELX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and RELX PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELX PLC 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 RELX PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELX PLC has no effect on the direction of Citigroup i.e., Citigroup and RELX PLC go up and down completely randomly.

Pair Corralation between Citigroup and RELX PLC

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.62 times more return on investment than RELX PLC. However, Citigroup is 1.62 times more volatile than RELX PLC. It trades about 0.4 of its potential returns per unit of risk. RELX PLC is currently generating about 0.29 per unit of risk. If you would invest  7,100  in Citigroup on October 28, 2024 and sell it today you would earn a total of  1,048  from holding Citigroup or generate 14.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.0%
ValuesDaily Returns

Citigroup  vs.  RELX PLC

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 18 (%) 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.
RELX PLC 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in RELX PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, RELX PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Citigroup and RELX PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and RELX PLC

The main advantage of trading using opposite Citigroup and RELX PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, RELX PLC 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 RELX PLC will offset losses from the drop in RELX PLC's long position.
The idea behind Citigroup and RELX PLC 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

Other Complementary Tools

Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Stocks Directory
Find actively traded stocks across global markets