Correlation Between Citigroup and Solid Power

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

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

Diversification Opportunities for Citigroup and Solid Power

0.91

Correlation Coefficient

Citigroup  Solid Power

Almost no diversification

The 3 months correlation between Citigroup and Solid is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power 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 Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of Citigroup i.e., Citigroup and Solid Power go up and down completely randomly.

Pair Corralation between Citigroup and Solid Power

Taking into account the 90-day investment horizon Citigroup is expected to generate 4.98 times less return on investment than Solid Power. But when comparing it to its historical volatility, Citigroup is 8.24 times less risky than Solid Power. It trades about 0.37 of its potential returns per unit of risk. Solid Power is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Solid Power on May 1, 2025 and sell it today you would earn a total of  38.00  from holding Solid Power or generate 253.33% return on investment over 90 days.

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

Citigroup  vs.  Solid Power

Citigroup

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 29 (%) 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.

Solid Power

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Power are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Solid Power showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Solid Power

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

The idea behind Citigroup and Solid Power 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.