Correlation Between 00108WAF7 and CITIGROUP

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Can any of the company-specific risk be diversified away by investing in both 00108WAF7 and CITIGROUP 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 00108WAF7 and CITIGROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEP TEX INC and CITIGROUP INC 6675, you can compare the effects of market volatilities on 00108WAF7 and CITIGROUP 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 00108WAF7 with a short position of CITIGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and CITIGROUP.

Diversification Opportunities for 00108WAF7 and CITIGROUP

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between 00108WAF7 and CITIGROUP is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and CITIGROUP INC 6675 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP INC 6675 and 00108WAF7 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 AEP TEX INC are associated (or correlated) with CITIGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP INC 6675 has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and CITIGROUP go up and down completely randomly.

Pair Corralation between 00108WAF7 and CITIGROUP

Assuming the 90 days trading horizon AEP TEX INC is expected to generate 2.91 times more return on investment than CITIGROUP. However, 00108WAF7 is 2.91 times more volatile than CITIGROUP INC 6675. It trades about 0.14 of its potential returns per unit of risk. CITIGROUP INC 6675 is currently generating about 0.05 per unit of risk. If you would invest  7,175  in AEP TEX INC on August 29, 2024 and sell it today you would lose (86.00) from holding AEP TEX INC or give up 1.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy69.66%
ValuesDaily Returns

AEP TEX INC  vs.  CITIGROUP INC 6675

 Performance 
       Timeline  
AEP TEX INC 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 00108WAF7 sustained solid returns over the last few months and may actually be approaching a breakup point.
CITIGROUP INC 6675 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CITIGROUP INC 6675 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CITIGROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

00108WAF7 and CITIGROUP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 00108WAF7 and CITIGROUP

The main advantage of trading using opposite 00108WAF7 and CITIGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, CITIGROUP 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 CITIGROUP will offset losses from the drop in CITIGROUP's long position.
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The idea behind AEP TEX INC and CITIGROUP INC 6675 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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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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