Correlation Between Citigroup and Cosmos

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

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

Diversification Opportunities for Citigroup and Cosmos

0.45

Correlation Coefficient

Citigroup  Cosmos

Very weak diversification

The 3 months correlation between Citigroup and Cosmos is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Cosmos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos 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 Cosmos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos has no effect on the direction of Citigroup i.e., Citigroup and Cosmos go up and down completely randomly.

Pair Corralation between Citigroup and Cosmos

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.39 times more return on investment than Cosmos. However, Citigroup is 2.57 times less risky than Cosmos. It trades about 0.28 of its potential returns per unit of risk. Cosmos is currently generating about 0.02 per unit of risk. If you would invest  7,498  in Citigroup on May 27, 2025 and sell it today you would earn a total of  2,028  from holding Citigroup or generate 27.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Citigroup  vs.  Cosmos

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 21 (%) 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.

Cosmos

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Cosmos is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Citigroup and Cosmos

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

The idea behind Citigroup and Cosmos 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 Transaction History module to view history of all your transactions and understand their impact on performance.