Correlation Between Citigroup and Four Corners

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

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

Diversification Opportunities for Citigroup and Four Corners

-0.33

Correlation Coefficient

Citigroup  Four Corners

Very good diversification

The 3 months correlation between Citigroup and Four is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Four Corners Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Corners Property 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 Four Corners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Corners Property has no effect on the direction of Citigroup i.e., Citigroup and Four Corners go up and down completely randomly.

Pair Corralation between Citigroup and Four Corners

Taking into account the 90-day investment horizon Citigroup is expected to generate 2.42 times more return on investment than Four Corners. However, Citigroup is 2.42 times more volatile than Four Corners Property. It trades about 0.21 of its potential returns per unit of risk. Four Corners Property is currently generating about 0.21 per unit of risk. If you would invest  6,360  in Citigroup on August 29, 2024 and sell it today you would earn a total of  615.00  from holding Citigroup or generate 9.67% return on investment over 90 days.

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

Citigroup  vs.  Four Corners Property

Citigroup

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 8 (%) 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.

Four Corners Property

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Four Corners Property are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Four Corners is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Citigroup and Four Corners

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

The idea behind Citigroup and Four Corners Property 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.