Correlation Between Citigroup and Inhibrx

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

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

Diversification Opportunities for Citigroup and Inhibrx

-0.44

Correlation Coefficient

Citigroup  Inhibrx

Very good diversification

The 3 months correlation between Citigroup and Inhibrx is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Inhibrx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inhibrx 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 Inhibrx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inhibrx has no effect on the direction of Citigroup i.e., Citigroup and Inhibrx go up and down completely randomly.

Pair Corralation between Citigroup and Inhibrx

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Inhibrx. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 2.03 times less risky than Inhibrx. The stock trades about -0.09 of its potential returns per unit of risk. The Inhibrx is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,486  in Inhibrx on September 24, 2024 and sell it today you would lose (26.00) from holding Inhibrx or give up 1.75% of portfolio value over 90 days.

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

Citigroup  vs.  Inhibrx

Citigroup

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 9 (%) 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.

Inhibrx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inhibrx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Inhibrx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and Inhibrx

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

The idea behind Citigroup and Inhibrx 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.