Correlation Between Citigroup Capital and UBS Group

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

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

Diversification Opportunities for Citigroup Capital and UBS Group

0.59

Correlation Coefficient

Citigroup Capital  UBS Group

Very weak diversification

The 3 months correlation between Citigroup and UBS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup Capital XIII and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG and Citigroup Capital 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 Capital XIII are associated (or correlated) with UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of Citigroup Capital i.e., Citigroup Capital and UBS Group go up and down completely randomly.

Pair Corralation between Citigroup Capital and UBS Group

Given the investment horizon of 90 days Citigroup Capital is expected to generate 6.63 times less return on investment than UBS Group. But when comparing it to its historical volatility, Citigroup Capital XIII is 2.81 times less risky than UBS Group. It trades about 0.11 of its potential returns per unit of risk. UBS Group AG is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3,002  in UBS Group AG on April 25, 2025 and sell it today you would earn a total of  819.00  from holding UBS Group AG or generate 27.28% return on investment over 90 days.

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

Citigroup Capital XIII  vs.  UBS Group AG

Citigroup Capital XIII

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup Capital XIII are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Citigroup Capital is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

UBS Group AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, UBS Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup Capital and UBS Group

The main advantage of trading using opposite Citigroup Capital and UBS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup Capital position performs unexpectedly, UBS Group 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 UBS Group will offset losses from the drop in UBS Group's long position.

The idea behind Citigroup Capital XIII and UBS Group AG 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.