Correlation Between Citigroup and DTRGR

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Can any of the company-specific risk be diversified away by investing in both Citigroup and DTRGR 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 DTRGR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and DTRGR 365 07 APR 27, you can compare the effects of market volatilities on Citigroup and DTRGR 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 DTRGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and DTRGR.

Diversification Opportunities for Citigroup and DTRGR

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Citigroup and DTRGR is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and DTRGR 365 07 APR 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTRGR 365 07 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 DTRGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTRGR 365 07 has no effect on the direction of Citigroup i.e., Citigroup and DTRGR go up and down completely randomly.

Pair Corralation between Citigroup and DTRGR

Taking into account the 90-day investment horizon Citigroup is expected to generate 10.44 times more return on investment than DTRGR. However, Citigroup is 10.44 times more volatile than DTRGR 365 07 APR 27. It trades about 0.15 of its potential returns per unit of risk. DTRGR 365 07 APR 27 is currently generating about -0.3 per unit of risk. If you would invest  6,205  in Citigroup on August 30, 2024 and sell it today you would earn a total of  811.00  from holding Citigroup or generate 13.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy47.73%
ValuesDaily Returns

Citigroup  vs.  DTRGR 365 07 APR 27

 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.
DTRGR 365 07 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DTRGR 365 07 APR 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DTRGR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Citigroup and DTRGR Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and DTRGR

The main advantage of trading using opposite Citigroup and DTRGR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, DTRGR 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 DTRGR will offset losses from the drop in DTRGR's long position.
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The idea behind Citigroup and DTRGR 365 07 APR 27 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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