Correlation Between Citigroup and Catalyst Pharmaceuticals

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

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

Diversification Opportunities for Citigroup and Catalyst Pharmaceuticals

-0.8

Correlation Coefficient

Citigroup  Catalyst Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Citigroup and Catalyst is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Catalyst Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Pharmaceuticals has no effect on the direction of Citigroup i.e., Citigroup and Catalyst Pharmaceuticals go up and down completely randomly.

Pair Corralation between Citigroup and Catalyst Pharmaceuticals

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.66 times more return on investment than Catalyst Pharmaceuticals. However, Citigroup is 1.52 times less risky than Catalyst Pharmaceuticals. It trades about 0.25 of its potential returns per unit of risk. Catalyst Pharmaceuticals is currently generating about -0.12 per unit of risk. If you would invest  7,508  in Citigroup on May 13, 2025 and sell it today you would earn a total of  1,765  from holding Citigroup or generate 23.51% return on investment over 90 days.

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

Citigroup  vs.  Catalyst Pharmaceuticals

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 19 (%) 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.

Catalyst Pharmaceuticals

Risk-Adjusted Performance

Weakest

Over the last 90 days Catalyst Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Citigroup and Catalyst Pharmaceuticals

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

The idea behind Citigroup and Catalyst Pharmaceuticals 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.