Correlation Between Skyworks Solutions and Citigroup

Can any of the company-specific risk be diversified away by investing in both Skyworks Solutions 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 Skyworks Solutions and Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Skyworks Solutions and Citigroup, you can compare the effects of market volatilities on Skyworks Solutions 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 Skyworks Solutions with a short position of Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skyworks Solutions and Citigroup.

Diversification Opportunities for Skyworks Solutions and Citigroup

-0.02

Correlation Coefficient

Skyworks Solutions  Citigroup

Good diversification

The 3 months correlation between Skyworks and Citigroup is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Skyworks Solutions and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup and Skyworks Solutions 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 Skyworks Solutions 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 has no effect on the direction of Skyworks Solutions i.e., Skyworks Solutions and Citigroup go up and down completely randomly.

Pair Corralation between Skyworks Solutions and Citigroup

Given the investment horizon of 90 days Skyworks Solutions is expected to under-perform the Citigroup. In addition to that, Skyworks Solutions is 2.42 times more volatile than Citigroup. It trades about -0.14 of its total potential returns per unit of risk. Citigroup is currently generating about 0.0 per unit of volatility. If you would invest  6,160  in Citigroup on February 5, 2024 and sell it today you would lose (8.00) from holding Citigroup or give up 0.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Skyworks Solutions  vs.  Citigroup

Skyworks Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skyworks Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Skyworks Solutions is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Citigroup

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Citigroup may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Skyworks Solutions and Citigroup

The main advantage of trading using opposite Skyworks Solutions and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skyworks Solutions 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.

The idea behind Skyworks Solutions and Citigroup 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.