Correlation Between Citigroup and 606822CE2

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Can any of the company-specific risk be diversified away by investing in both Citigroup and 606822CE2 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 606822CE2 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and MUFG 408 19 APR 28, you can compare the effects of market volatilities on Citigroup and 606822CE2 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 606822CE2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and 606822CE2.

Diversification Opportunities for Citigroup and 606822CE2

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Citigroup and 606822CE2 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and MUFG 408 19 APR 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUFG 408 19 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 606822CE2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUFG 408 19 has no effect on the direction of Citigroup i.e., Citigroup and 606822CE2 go up and down completely randomly.

Pair Corralation between Citigroup and 606822CE2

Taking into account the 90-day investment horizon Citigroup is expected to generate 5.93 times more return on investment than 606822CE2. However, Citigroup is 5.93 times more volatile than MUFG 408 19 APR 28. It trades about 0.27 of its potential returns per unit of risk. MUFG 408 19 APR 28 is currently generating about -0.2 per unit of risk. If you would invest  6,315  in Citigroup on September 2, 2024 and sell it today you would earn a total of  772.00  from holding Citigroup or generate 12.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy71.43%
ValuesDaily Returns

Citigroup  vs.  MUFG 408 19 APR 28

 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.
MUFG 408 19 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MUFG 408 19 APR 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 606822CE2 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Citigroup and 606822CE2 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and 606822CE2

The main advantage of trading using opposite Citigroup and 606822CE2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, 606822CE2 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 606822CE2 will offset losses from the drop in 606822CE2's long position.
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The idea behind Citigroup and MUFG 408 19 APR 28 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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