Correlation Between Citigroup and DMY Squared

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

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

Diversification Opportunities for Citigroup and DMY Squared

-0.49

Correlation Coefficient

Citigroup  DMY Squared

Very good diversification

The 3 months correlation between Citigroup and DMY is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and dMY Squared Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dMY Squared Technology 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 DMY Squared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dMY Squared Technology has no effect on the direction of Citigroup i.e., Citigroup and DMY Squared go up and down completely randomly.

Pair Corralation between Citigroup and DMY Squared

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.54 times more return on investment than DMY Squared. However, Citigroup is 1.86 times less risky than DMY Squared. It trades about 0.32 of its potential returns per unit of risk. dMY Squared Technology is currently generating about 0.01 per unit of risk. If you would invest  7,003  in Citigroup on May 2, 2025 and sell it today you would earn a total of  2,367  from holding Citigroup or generate 33.8% return on investment over 90 days.

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

Citigroup  vs.  dMY Squared Technology

Citigroup

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 25 (%) 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.

dMY Squared Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days dMY Squared Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, DMY Squared is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and DMY Squared

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

The idea behind Citigroup and dMY Squared Technology 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.