Correlation Between Citigroup and Consumer Portfolio

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

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

Diversification Opportunities for Citigroup and Consumer Portfolio

0.62

Correlation Coefficient

Citigroup  Consumer Portfolio

Poor diversification

The 3 months correlation between Citigroup and Consumer is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Consumer Portfolio Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Portfolio 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 Consumer Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Portfolio has no effect on the direction of Citigroup i.e., Citigroup and Consumer Portfolio go up and down completely randomly.

Pair Corralation between Citigroup and Consumer Portfolio

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.59 times more return on investment than Consumer Portfolio. However, Citigroup is 1.7 times less risky than Consumer Portfolio. It trades about 0.41 of its potential returns per unit of risk. Consumer Portfolio Services is currently generating about 0.06 per unit of risk. If you would invest  6,404  in Citigroup on April 22, 2025 and sell it today you would earn a total of  2,941  from holding Citigroup or generate 45.92% return on investment over 90 days.

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

Citigroup  vs.  Consumer Portfolio Services

Citigroup

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 32 (%) 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.

Consumer Portfolio

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Portfolio Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Consumer Portfolio may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Citigroup and Consumer Portfolio

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

The idea behind Citigroup and Consumer Portfolio Services 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.