Correlation Between Citigroup and Advent Wireless

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

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

Diversification Opportunities for Citigroup and Advent Wireless

-0.71

Correlation Coefficient

Citigroup  Advent Wireless

Pay attention - limited upside

The 3 months correlation between Citigroup and Advent is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Advent Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Wireless 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 Advent Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Wireless has no effect on the direction of Citigroup i.e., Citigroup and Advent Wireless go up and down completely randomly.

Pair Corralation between Citigroup and Advent Wireless

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.31 times more return on investment than Advent Wireless. However, Citigroup is 3.23 times less risky than Advent Wireless. It trades about 0.29 of its potential returns per unit of risk. Advent Wireless is currently generating about 0.06 per unit of risk. If you would invest  7,024  in Citigroup on May 3, 2025 and sell it today you would earn a total of  2,159  from holding Citigroup or generate 30.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Citigroup  vs.  Advent Wireless

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Advent Wireless

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Wireless are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Advent Wireless showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Advent Wireless

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

The idea behind Citigroup and Advent Wireless 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..