Correlation Between Citigroup and Timber Point

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

By analyzing existing cross correlation between Citigroup and Timber Point Alternative, you can compare the effects of market volatilities on Citigroup and Timber Point 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 Timber Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Timber Point.

Diversification Opportunities for Citigroup and Timber Point

0.87

Correlation Coefficient

Citigroup  Timber Point

Very poor diversification

The 3 months correlation between Citigroup and Timber is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Timber Point Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timber Point Alternative 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 Timber Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timber Point Alternative has no effect on the direction of Citigroup i.e., Citigroup and Timber Point go up and down completely randomly.

Pair Corralation between Citigroup and Timber Point

Taking into account the 90-day investment horizon Citigroup is expected to generate 5.33 times more return on investment than Timber Point. However, Citigroup is 5.33 times more volatile than Timber Point Alternative. It trades about 0.17 of its potential returns per unit of risk. Timber Point Alternative is currently generating about 0.16 per unit of risk. If you would invest  8,523  in Citigroup on July 9, 2025 and sell it today you would earn a total of  1,282  from holding Citigroup or generate 15.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Citigroup  vs.  Timber Point Alternative

Citigroup

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Timber Point Alternative

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Timber Point Alternative are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Timber Point is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Timber Point

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

The idea behind Citigroup and Timber Point Alternative 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.