Correlation Between Citigroup and SPAC

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

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

Diversification Opportunities for Citigroup and SPAC

0.51

Correlation Coefficient

Citigroup  SPAC

Very weak diversification

The 3 months correlation between Citigroup and SPAC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and SPAC and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAC and New 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 SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAC and New has no effect on the direction of Citigroup i.e., Citigroup and SPAC go up and down completely randomly.

Pair Corralation between Citigroup and SPAC

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.41 times more return on investment than SPAC. However, Citigroup is 1.41 times more volatile than SPAC and New. It trades about 0.38 of its potential returns per unit of risk. SPAC and New is currently generating about 0.07 per unit of risk. If you would invest  6,760  in Citigroup on May 1, 2025 and sell it today you would earn a total of  2,821  from holding Citigroup or generate 41.73% return on investment over 90 days.

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

Citigroup  vs.  SPAC and New

Citigroup

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 30 (%) 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.

SPAC and New

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPAC and New are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SPAC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Citigroup and SPAC

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

The idea behind Citigroup and SPAC and New 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.