Correlation Between Citigroup and Data Patterns

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

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

Diversification Opportunities for Citigroup and Data Patterns

0.76

Correlation Coefficient

Citigroup  Data Patterns

Poor diversification

The 3 months correlation between Citigroup and Data is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Data Patterns Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Patterns Limited 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 Data Patterns. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Patterns Limited has no effect on the direction of Citigroup i.e., Citigroup and Data Patterns go up and down completely randomly.

Pair Corralation between Citigroup and Data Patterns

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.41 times more return on investment than Data Patterns. However, Citigroup is 2.43 times less risky than Data Patterns. It trades about 0.43 of its potential returns per unit of risk. Data Patterns Limited is currently generating about 0.16 per unit of risk. If you would invest  6,219  in Citigroup on April 21, 2025 and sell it today you would earn a total of  3,126  from holding Citigroup or generate 50.27% return on investment over 90 days.

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

Citigroup  vs.  Data Patterns Limited

Citigroup

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 34 (%) 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.

Data Patterns Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Data Patterns Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Data Patterns unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Data Patterns

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

The idea behind Citigroup and Data Patterns Limited 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.