Correlation Between Citigroup and Selectquote

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

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

Diversification Opportunities for Citigroup and Selectquote

0.83

Correlation Coefficient

Citigroup  Selectquote

Very poor diversification

The 3 months correlation between Citigroup and Selectquote is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Selectquote in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selectquote 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 Selectquote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selectquote has no effect on the direction of Citigroup i.e., Citigroup and Selectquote go up and down completely randomly.

Pair Corralation between Citigroup and Selectquote

Taking into account the 90-day investment horizon Citigroup is expected to under-perform the Selectquote. But the stock apears to be less risky and, when comparing its historical volatility, Citigroup is 2.05 times less risky than Selectquote. The stock trades about -0.07 of its potential returns per unit of risk. The Selectquote is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  384.00  in Selectquote on January 13, 2025 and sell it today you would lose (69.00) from holding Selectquote or give up 17.97% of portfolio value over 90 days.

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

Citigroup  vs.  Selectquote

Citigroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Selectquote

Risk-Adjusted Performance

Very Weak

Over the last 90 days Selectquote has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Citigroup and Selectquote

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

The idea behind Citigroup and Selectquote 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.